Friday, May 06, 2011

Urgent: Investors cast 41M shares against exec pay

In the first such shareholder advisory vote, 40.8 million shares -- about 20% of all -- were cast against Gannett's executive pay policy, Corporate just disclosed in a regulatory filing.

The breakdown from Tuesday's annual stockholders meeting:
  • For: 124.2 million shares 
  • Against: 40.8 million 
  • Broker non-vote: 36.5 million 
  • Abstain: 3.5 million 
In contrast, at the New York Times Co., just 5,760 shares -- less than 1% -- were voted against the executive pay policy vs. 766,466 in favor. Nearly 21,000 shares were counted as "broker non-vote." There were no abstentions.

The Sulzberger-Ochs family controls 18% of the NYT Co.'s shares.

The filing with the U.S. Securities and Exchange Commission also breaks down the votes on re-electing all nine members of the board of directors, including Chairman and CEO Craig Dubow.

Dubow was re-elected with 164 million shares vs. 4.2 million withheld.

Notably, three directors drew heavy withhold votes: Arthur Harper, Marjorie Magner and Duncan McFarland -- each, about 32 million shares. McFarland's is significant because he is now the board's presiding director, a position akin to deputy chairman. He replaced Karen Hastie Williams, who retired at the annual meeting.

The three were on the executive compensation committee that recommended Dubow get $9.4 million in pay last year, double the amount he got in 2009. They each lost about 20% of the vote, the same proportion as those voted against the executive pay policy. (Williams had been the fourth committee member.)

Corporate had previously said shareholders re-elected the directors, and approved two advisory votes on executive pay. Today's filing gives details on the vote breakdowns.

Beware 'disgruntled' investors
Last year's Dodd-Frank Act for the first time required most companies to put top-officer pay packages to an "advisory vote" by shareholders, beginning Jan. 21 of this year.

"Their advice is not legally binding," Reynolds Holding says in a Reuters column today, "but that hasn’t stopped disgruntled investors from calling in lawyers to enforce their views. Rather than fight, boards might be smarter just to listen."

Earlier: For some directors, Gannett's stock is a bad bet.


  1. Since most of the shares are voted by pension funds and other big institutional investors, I'm surprised there were so many cast against the executive pay plan.

    Typically, big investors are often more friendly toward management than individual investors, like you and me.

  2. Maybe if you studied a little more you would have the answer to this simple question, Jim.

  3. @947 Maybe if you had a swallow of Haley's MO you'd loosen up a little and share your exquisite knowledge with the ignorant (but more friendly) masses.

  4. I did not ask a question.

    However, for those wondering why one in five shares were voted against management's pay packages, and the directors who approved them, the answer is fairly simple: They think Dubow & Co. are overpaid.

    The board and management would be wise to show they got the message. If that same 20% took the next step -- ran an alternate slate of directors -- things would get ugly very fast.

  5. Okay Jim, there you go. Run for the Board. You'd get 20% of the vote and teach them a lesson! Fact is, what would you run on? Your vast business knowledge would turn a profitable company into...what?

    It's not so easy. Look at our friends at Lee. They can't even place a bond in the market and get it sold. McClatchy is in shambles. The Times is told what to do by someone South of the Border. It is not easy.

    I don't like the way things are going. But the company is in no danger of bankruptcy, has new products that who knows might catch on, has a brand. And if that means change, I guess that is what it would be. But as a shareholder, it's what I want.

    Do you honestly think a new Board would do things different than the current one? Do you think they's snap a finger and USCP revenue would go up, not down. Most likely, they would package the papers after cutting even more, and sell it off as a cheap ass bundle and reinvest whatever they got somewhere else. How does that solve any of the majority of negative comments on the blog? It doesn't.

    I haven't given up. I take my check every two weeks and do what I do. I guess it's not enough, but I try. A new board, I'm probably history along with 10,000 others.

  6. 9:48 -- As an investor, you're goal was investing in a company that would steadily shrink and become less of a player in the marketplace for 15 consecutive years? Note the earlier post about Gannett's positioning on the Fortune 500 and you will see that is exactly what Gannett has done.

    That's not what I look for either as an investor or employee, and I certainly don't expect the management team to take ever-greater bonuses and rewards for producing that result.

    There are executive teams that have grown their companies, even through the recession. They are the ones that deserve the rewards.

    Also, there's no reason to believe your job would be more unstable if Gannett sold off a bunch of its properties. Unless you are one of the handful of high paid executives in the good ol' boys club, your job is unstable now.

    If the outlet you work for is sold, you could lose your job. Or you might find yourself employed under by someone who better appreciates your skill set and has an actual interest in growing the company you work for. You just don't know what's going to happen, so making broad predictions is pointless.

  7. 9:48 You and I appear to agree on the outcome of a new group of board members.

    You are absolutely correct when you wrote: "Most likely, they would package the papers after cutting even more, and sell it off as a cheap ass bundle and reinvest whatever they got somewhere else."

  8. Were about four years away from a sale of the company. Dubow will then be 60 and ready for his big payout. He still has ample looting to do in the time being.

  9. The board is deuchebag central.

  10. Ok Gannett leadership us bad. Jim please name the legacy newspaper companies that have done a better job and are setting the example we should follow. It would be interesting to see what those companies and their boards are doing well. Just gives us the top five ND also show us how their stock has done over the last five years so we can really show the readers hiw these companies mDe it happen.

  11. This comment has been removed by a blog administrator.

  12. I agree that it doesn't matter what other companies have done. When you use that standard you can justify any level of incompetence, right?

    Jim has repeatedly posted stats showing that GCI has underperformed by industry standards. As I recall, the New York Times Company and one or two others are performing better. I'm sure he has those stats.

    But it really shouldn't matter. You don't deserve fat paychecks and bonuses for shrinking your company, even if everybody else in your industry is flailing. All that means is that nobody in your industry deserves fat paychecks and bonuses. That's the problem with American business today. There's a lot of talk about shared sacrifice, but the leaders of our companies don't actually walk the talk. They bank oodles of money when they fail ... and even more when they succeed.

    In reality, if they are going to pull down such ridiculous profits when they're successful, they should make nothing and perhaps even lose money when they aren't. That is the entrepreneurial model, but they aren't comfortable with being rewarded only when they actually get the job done.

  13. 7:33 Here is the performance of four newspaper stocks since July 15, 2005, when Craig Dubow became CEO:

    * GCI: down 79%
    * LEE: down 97%
    * MNI: down 95%
    * NYT: down 75%

    As you can see, the New York Times Co. did a tiny bit better than GCI, and Lee and McClatchy did quite a bit worse.

    In my view, the NYT Co. is superior not because of its stock performance, but because The New York Times itself is such a vital source of public service journalism.

    Overall, however, investors in newspaper stocks got whacked over the past five years.

    Note: I didn't include the Washington Post Co. because it's not really a newspaper stock, given the role of its Kaplan testing subsidiary. And I didn't include News Corp., because its Wall Street Journal and community papers are too small a slice of the company. Finally, I didn't include E.W. Scripps or Belo, because those companies spun off their newspapers during those five years, so it wouldn't be an apples-to-apples comparison.

  14. 11:40 If you want to draw comparisons, you should include all the newspaper companies, since Scripps and Belo both made valid business decisions in this five-year period that were somewhat available to GCI, but not taken. Belo split its TV and newspaper operations, which GCI could have done. Scripps had taken its newspaper profits and put them into creating a new category TV network, which it then split off. The Washington Post used its profits to buy a for-profit Kaplan university, which did well when newspapers didn't. GCI could have made similar business decisions, but did not. It could have (should have, IMHO) diversified during the heydays of rich revenues, but chose not to and instead bought more newspapers. McClatchy and Tribune did the same. Hindsight is 20/20, but those who chose the path of consolidating their newspaper holdings are looking very bad at this point. Certainly, they knew this day was coming. The Internet wasn't new five years ago and this carnage of print was well forecast.

  15. I will give NYT Co. a slight advantage because at least they are TRYING. GCI's approach is smoke and mirrors repackaging at best. Look! A new mast head an redesign. Oh by the way, if you want your local news from last night, don't look in our paper. In fact don't look on our website either, because it is likely not to be there. Yes, that is the way to keep customers and profits coming in. NYT may fail in its effort to install paywalls, but at least they are trying to increase digital revenue streams instead of relying on pop-up ads (how 1990's!)
    Any other business would have sacked the five failures a long time ago, it's recession, there is an awful lot of talent out there.


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