Wednesday, September 25, 2013

Stock | GCI's shares hit two 52-week highs today

Gannett's stock pierced a 52-week intraday high this afternoon: $26.90 a share, after stockholders at Dallas-based Belo gave a final OK to Gannett's $1.5 billion takeover of their TV company.

By the end of the day, GCI closed a bit lower: $26.67, up 92 cents, or 3.6%. But that close, too, was a 52-week high.

Shares are now at their highest since the end of the Great Recession of 2009, when GCI fell below $2 a share and the board of directors slashed the quarterly dividend 90%, to 4 cents from 40 cents.

Since then, the board has raised the dividend twice. It's now 20 cents a quarter, for a yield of 3% based on today's closing price.

Gannett's stock has climbed 42% from a year ago vs. a much smaller 16% gain in the S&P 500, a widely watched index of overall market activity.

Happy days, here again
Some of the biggest individual beneficiaries of the stock run-up are senior executives whose stock options are no longer worthless.

For example, CEO Gracia Martore holds options on 363,000 shares with exercise prices of between $3.75 and $16.23 a share, according to the spring proxy report to shareholders. That means she can buy those shares for those prices, no matter how high GCI trades in the open market.

So, today's 92-cent bump increased the value of those options by about $334,000.

Now, Martore holds options on another 271,000 shares, too, but at exercise prices of $31.75 to $87.33 a share, the proxy report says.

GCI may well hit $31.75 again. But pigs will fly and then ice skate in hell before we ever see $87.33.

Unless, of course, the newspaper division gets spun off.


  1. Her restricted stock units are worth plenty now.

    1. That's true, of course. I focused only on the options because they were worthless for many years when the market price trailed the exercise prices.

      RSUs, or restricted stock units, nearly always have paper value, however small. Unlike options, RSUs are a straight-out award vesting over a period of years. Leave the company before they vest, and you lose them. That's what happened to Paul Saleh, the former chief financial officer.

      Martore has about 255,000 RSUs, according to the proxy. They were worth $6.8 million yesterday, based on GCI's closing price. As with all common shares, their value will fluctuate with market prices.

      I think that should be obvious to most of my readers. But based on recent comments in other threads, I'm expecting one of my critics to jump in here and say I've misrepresented the value of Martore's stock-based compensation.

      They may once more point to a footnote in the proxy that says: "There can be no assurance that the amounts shown in the table will ever be realized by an executive officer."

      This is what I call the falling-tree disclaimer: Any number of future events could prevent the executive from claiming unvested shares and profiting from them.

      For example, a tree could fall on Martore and strike her dead while she's leaving the Crystal Palace. Or a tsunami might unexpectedly wash her away from a Cape Cod beach. Or a baseball could knock her dead while she's watching her beloved Red Sox at Fenway Park.

      You get the idea.


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