Sunday, March 01, 2009

Documents hint at '08 bonuses for Dubow, others

Gannett gave stock options last week to CEO Craig Dubow and 10 other officers, part of their 2008 pay, new public documents show. The options give execs the right to buy GCI at $3.75 a share. But they're already worthless, because shares closed Friday at $3.24.


Athough Gannett's shares dived 89% last year, newly filed company documents show CEO Craig Dubow is getting a stock bonus with seven-figure profit potential. That would be in addition to his $1 million reduced salary, plus any cash bonus coming his way. Reading between the lines, however, Dubow may not be getting as rich a bonus overall as last year; we'll know when final compensation figures for the top brass are published in the weeks ahead.

The surprise winner in Corporate's latest stock bonus bonanza: Jack Williams (left), president of Gannett Digital Ventures, a portfolio that includes jobs site CareerBuilder. Chief Financial Officer Gracia Martore also did well, the documents show; she played a big role in eliminating 4,600 jobs last year -- one in 10 -- through layoffs and other means.

Dubow and perhaps hundreds of other senior managers near the operating-committee level get a chunk of their pay in Gannett shares -- often, in the form of options. Last year, 44% of Dubow's $7.5 million in total pay was in options, valued at $3.4 million. The rest was his $1.2 million in salary, and a $1.75 million bonus, paid 25% in stock. (2008 compensation table.)

What are options?
They give investors the right to buy company stock at a fixed price -- the strike price -- no matter how high the open-market price goes. For example, say GCI suddenly jumps to $5.75 a share. Over time, Dubow could buy the 500,000 options he just got for $3.75 each, turning a $1 million paper profit.

But if the stock does the opposite -- declines -- the options are worthless. For Dubow, last year's $3.4 million in options have no value; the strike price was $31.75, documents show.

Dubow (left) and the 10 other officers just got their options for their work last year; Gannett filed the Forms 4 paperwork on Friday, with the U.S. Securities and Exchange Commission. I've now reviewed the documents, comparing the 2009 options to those a year ago. (All GCI SEC filings, to 1994.)

I focused on Dubow and the eight other executives who were in substantially similar jobs in 2008 and 2007. (Chris Saridakis got named chief digital officer in January 2008. Bob Dickey got promoted to newspaper division president in February 2008.)

Highlights: 2008 vs. 2007
The nine executives this year got a combined 1.14 million options, all on the same terms: a $3.75 strike price, GCI's closing price last Wednesday, the day the options were granted. The options vest in four, equal annual installments, starting Feb. 25, 2010.

Last year, when shares were trading higher, the execs got fewer options: 448,500, with a strike price of $31.75. Those vest in four equal annual installments, beginning this past Friday.

The newest options are already "under water," because Gannett shares closed at $3.24 on Friday. Unless shares rise above $3.75, the options just granted remain worthless.

Craig Dubow. He got 500,000 options -- 44% of the combined 1.14 million for the group of nine execs. That was down from last year, when Dubow got 235,000 options -- 52% of the combined options. That lower share suggests his overall 2008 compensation may not be as generous as in 2007.

Gannett doesn't estimate dollar values for Dubow's and the other executives' options awards; those figures will be disclosed in this year's shareholder proxy report, likely to be published within the next two weeks.

Jack Williams. He got 96,000 vs. 16,500 a year ago. That means he got 8% of all options for the nine execs vs. 4% last year. (Can anyone explain what Williams did to warrant such a big payout?)

Gracia Martore. She got 200,000 -- 18% of this year's total -- vs. 62,000, or 14% of all, a year ago.

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Today's
Burlington Free Press, one of GCI's 102 dailies, Newseum]

18 comments:

  1. This is all truly perverse. The incentive now is to increase profits so Wall Street will swoon over the stock once again, and make it go up. But the tragedy is in order to make more profits in a time when ad revenues are collapsing is to cut expenses and payroll. What that means for the rest of us is unrelenting cutting, layoffs and buyouts. I am expecting soon also to see closing of papers that once were profitable, but are no longer because of the recession. Close them, and you magically improve the bottom line because there is no loss to account for. God help everyone who is working at a paper that is no longer profitable at this point. I suspect half of GCI papers are in that rank, including USAT.

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  2. Jim,

    See second paragraph in Dubow's option description for a grammar check.

    "Gannett don't estimate dollar values for Dubow's .....

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  3. Wonder why the company needs both a digital Pres. and VP?

    Also, didn't that contract for Saridakis have a provision that he would report to the CEO?

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  4. I've long thought that one reason the 11th floor can be so cavalier in its decisions on furloughs, pay reductions, and the like, is that those people more than make up in dividends and increases in share value the money that they lose in cuts "shared" with the rest of us. If you have a couple million shares of GCI, who cares if your salary's cut $200K? Between the stock-based income and the monstrously overblown remainder of regular comp, Dubow and Martore will barely notice a change.

    If these boobs really believed in the company, they'd take a couple years' compensation at the median for the company overall, and defer the rest until revenue growth targets are hit.

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  5. Awful, simply beyond belief! I am usually not at a loss for words, but this sickens me. I would not want to hear any of the "atta boy" and "kissy, kissy Gannett" comments from the moles who read this excellent blog.

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  6. Picking up where Anonymous@8:26 a.m. left off yesterday, it's interesting to compare the option awards for Jack Williams to USA Today Publisher Craig Moon. Williams got 96,000 to Moon's 65,000.

    Just as striking: Combined, the options given to these nine executives rose 154%, to 1.14 million, from a year ago.

    But Williams got 482% more options compared to a year ago. Moon: just 132%. Not sure what that's about.

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  7. Jim,
    Did you read the recently filed 10k? I actually think Saridakis did pretty well compared to other GMC members. It shows his LTIP plan and employment contract. If I am reading it correctly he can make another $6 million at the end of 2011. It seems like when you read his employment contract, he receives a large salary, a large bonus, restricted stock, stock options AND this LTIP thing!!!

    Clearly they are paying this guy a shitload of cash and options to keep him around.

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  8. This makes me want to throw up. There are people who are jobless and struggling to feed a family. What about the single mom who is working her ass off, 60+ hours a week, and worrying about losing her job in the weeks ahead. How do these people sleep at night?

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  9. Soon To Be Laid Off Blue Collar Here:

    I made 528% Profit shorting GANNETT stock.......there is some Justice. Sorry all my "worker bee" brothers & sisters could not share my insight.

    I will not let inferior intellects like those administering this company AFFECT my future any longer. And to the Largest Stockholders....You should have had me working for you....idiots.

    All the Best to the other worker bees like me. To short-sightedcorporates at Gannett and other dyfuctional firms....NO MERCY.

    I'll be like a Grizzy BEAR feeding on you while you're still alive.

    This is going to be Fun.

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  10. Like I have been saying many times on this blog, Saridakis does not need this job or this money. He has made hundreds of millions of dollars before he walked into this place.

    I just keep asking, "what the hell is he doing here?"

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  11. Saridakis is a washed-up nothing who hyped his resume. He's not the real brains who made Doubleclick, but someone who developed a clone that gives questionable information. It takes a dupe like Dubow to believe there is something more there, but I am sure corporate will realize he can't deliver. According to yesterday's posts, he maybe gone already.

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  12. The whole bonus thing makes me sick too. All these years I toiled at Gannett, 60-hour+ weeks, on call all the time, repeatedly awakened in the middle of the night, missed the kid's birthday party, worked 24 hours, you know the drill. Never once was I offered any kind of performance bonus. The only bonus I or any of my staff ever received was a $50 grocery card (reduced to $25 this year). Ha!! And this was "policy." "We don't give bonuses." What crap, while the honchos are cleaning up and sucking up. This is truly despicable for a newspaper company that constantly trumpets its ethical purity.

    One aspect of the bonus culture at the top that has never been made clear, and perhaps Jim can shed some light on it, are the types of bonuses being cleared by the site publishers. I'm sure they get them, and they're no doubt tied to revenue. But just how much they get has never been disclosed. Of course, that bonus process may not be all that unusual for publishers, though in times like these it is certainly ethically questionable, and in the news biz it's just plain ethically questionable, regardless. But where it obliterates the line between objectivity and bias is in the editor/publisher structure, where the top guy occupies both spots in a revenue-saving arrangement. For those guys to be taking revenue-based bonuses would be flat-out wrong, because they would constantly be forced to decide between the proper news judgment and the "protect the revenue" decision. I'm sure this has happened plenty of times at sites that have this bizarre arrangement, a plan in which Gannett basically, unilaterally decided that there is no difference between these two critical positions that have historically been separated for very good reasons.

    I can't say this has happened for sure, but I strongly suspect it has. Why wouldn't it, when this publisher is also the editor working long hours like the rest of us. This would be just another significant chink in the crumbling ethical armor in which Gannett has wrapped its two-faced message all these years. One message for the troops, another message for the brass. What double standard?

    When a company compromises its ethics once, it's just that much easier to compromise them again, and again, and again. It's that slippery slope thing ... damn ... slid off the slope again.

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  13. Ok Kool Aid drinkers here is the straight poop. It's good not bad that they gave them options. You see, you don't make money unless the stock goes up. If it goes way up, they make lots of money. If it goes way up we make lots of money because we keep our jobs.

    And for the record, none of the officers received bonuses this year. I am sorry you won't have that to gripe about but they didn't.

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  14. 10:57 That is hardly the straight poop. The stock doesn't go up by gravity. It goes up only if Wall Street believes GCI is moving towards more solid financial footing. If the economy continues to collapse (which it is), then the only possible way Corporate can maneuver the stock to go higher is to increase profits. In a climate of declining revenues, that means only one thing: cut expenses. So, no, not necessarily do we keep our jobs. In fact, it is more likely we lose.

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  15. 6:02pm said, "God help everyone who is working at a paper that is no longer profitable at this point. I suspect half of GCI papers are in that rank, including USAT.

    NOT SO! As reported elsewhere, only a "handful" of Gannett newspapers are not profitable. I take that to mean "five." We suffer from not being profitable enough for Gannett. That fact is sad.

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  16. Credit goes to Jack Williams for hanging in this long despite his lackluster track record.

    The joke on Williams among the online folks that know him is that everything he touches turns to dog shit. Kind of the anti-King-Midas touch.

    CareerPath? Anyone? Anyone? Classified Ventures? Anyone? Is this thing on?

    How 'bout a centralized site production facility that results in slower load times for the sites and resultant decreased page loads?

    You know what this company needs? Mommy sites. Hell yeah, that'll drive some serious revenue!

    Fuck that Yahoo! newspaper consortium thing. We got a mommy site to build, boys!

    By all means! Gimme us some of that!

    Excellent work Jack! God, you're one smart fuck!

    His only true skill seems to be getting himself adjacent to power within the company and parroting online catch phrases. And kissing ass.

    Anyone see it any differently? Does this guy have any talent? Does he know anything? Has he ever, ever, ever fucking run a web site?

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  17. Hey Jim:
    What if the board implements a huge stock buy back right before the options become exercisable? They could buy back enough to send the price above $3.75, putting their options in the money.

    Corrupt as that would look, wouldn't that be par for the course?

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