Tuesday, April 12, 2011

Exec pay | On branding, and curious accounting

[Updated at 5:20 p.m. ET with more reaction.] Among bloggers reacting to yesterday's New York Times takedown of Gannett's sky-high executive payouts last year:
  • Blanding a brand. The issue for any brand is how you cut costs -- especially a media brand like Gannett’s that requires talent and the right kind of spending to produce high-value content. In Gannett’s case, the decision by management to keep executive pay packages rich while cutting into the livelihoods of the company’s employees not only looks bad but it badly hurts brand equity.
  • Double (ac)counting. The company issued $500 million in bonds to pay debt -- one accomplishment that the board of directors considered -- and then the company paid down a total of $710 million in debt, most of which came from the issued bonds, which was a second accomplishment. Once again, the board was able to make a single action go a longer way. What frugality!
  • Guiding a decline. The piece should make your blood boil, given its portrayal of the greedy executives. The NYT's David Carr says he’s not talking about “incompetents feeding at the trough,” which is correct. The top people at Gannett are quite competent at what they do, namely guiding the decline with little creative response.


  1. Double accounting: Jim, are you sure they are right? This same type of verbage, with minor tweaks, has been used in the last three proxies. Would leave me to believe, with my casual glance, that the newly issued bonds extended the due dates, separate from paying down total debt. That debt, by the way, has gone from $3.8B to $2.3B in that time, which is something I think the board would have to be VERY happy about.

  2. The blogger's point is that the board gave the executives credit twice for doing just one thing:

    * credit for the bond sale
    * credit for using the proceeds to pay down debt.

    The credit translated into bigger bonuses.

  3. Clearing my throat so you hear me this time: Are you SURE HE IS RIGHT? Are you sure it's not $500M new bonds plus $700M debt pay down = $1.2B? Except $500M was simply replacing (not reducing) existing debt, leaving the net debt reduction $700M? That would be two separate things (not sure I'm right, but I don't trust bloggers to do enough reporting to get such a thing right, either).


Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

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