Friday, September 16, 2011

What Dubow gets if disability forces him out: $37M; payout much bigger than in traditional retirement

Gannett would pay Chairman and CEO Craig Dubow $37.1 million in disability benefits, stock awards, pension and other payments if his new health problems force him from his job permanently, according to company documents filed with federal regulators.

Dubow, 56, is entitled to the payout under terms of his employment contract and the disability policy for senior executives, according to the annual proxy report to shareholders, which Gannett filed in March with the U.S. Securities and Exchange Commission. The payments are considerably more than what he would get, $22.5 million, if he retired voluntarily, the report says.

Dubow also would get limited use of the Corporate jet and access to a country club, the cost of which he would pay -- but at substantially lower, company-subsidized rates, the proxy report says.

The $37.1 million disability payout is outlined on Pages 45-47 of the report.

GCI announced early last night that Dubow is taking a second medical leave to deal with back and hip problems that sidelined him for four months starting in June 2009. COO Gracia Martore, who became principal executive during Dubow's last leave, will assume that job again. Martore, 60, is his likely successor when he leaves his job permanently -- although her age could become an issue.

In its statement, the company quoted lead board of directors member Duncan McFarland: "We wish Craig well during this difficult personal time. The board has confidence in Gracia and our very capable management team to run the day to day operations of the company, and we believe Gannett won't miss a beat at this important juncture."

The announcement came after stock markets closed. This morning, GCI recently traded for $10.12 a share, up 4 cents.

Length of leave unclear
Dubow has been chief executive since July 2005, and was made chairman of the board of directors a year later. Martore was promoted in February 2010 to GCI's No. 2 executive, president and chief operating officer. She had been chief financial officer since 2003, and first joined the company in 1985.

The company's announcement did not say when Dubow's medical leave would start, and did not estimate how long he might be out. It also did not say when Dubow and the board of directors first discussed this leave, leaving unanswered questions about the urgency of his medical situation.

Published reports last night quoted a GCI spokeswoman saying only that Dubow's problems stemmed from back and hip problems. He has received surgery at least twice in the past.

Since his return to work in October 2009 from his last leave, Dubow has often been seen in a wheelchair and using crutches during frequent visits to GCI worksites. He has been reported on these visits as recently as the past month.

Breakdown of $37.1M
Similar disability payouts, although in very different amounts, also are due to Martore and four other executives, the proxy says.

Here's a breakdown of the estimated payouts to Dubow:
  • Pension: $12.9 million
  • Stock options: $6 million
  • Restricted stock units: $5.3 million
  • Disability benefits: $6.9 million
  • Final salary, bonus payment: $5.9 million
The proxy report does not detail the specific circumstances, nor timing, under which these benefits would be triggered for Dubow and the other five senior managers known as "named executive officers." It says only that the payments are due "if the employment of a NEO is terminated upon the executive's disability."

Board empowered to remove him
However, under the terms of Dubow's employment contract, the board of directors is empowered to remove him under circumstances where he is no longer able to perform his duties or has otherwise violated the terms of the contract.

If Dubow were to retire voluntarily, rather than via disability, he would get the much smaller $22.5 million as follows, according to Page 43 of the proxy report.
  • Pension: $11.1 million
  • Stock options: $6 million
  • Restricted stock units: $5.3 million
The disability salary and bonus payments are spelled out this way, the proxy report says:

"Pursuant to their employment contracts, upon a termination of employment as a result of disability, Dubow and Martore would be entitled to a lump sum payment in an amount equal to two times the sum of (a) the executive’s base salary as of the date of termination (but no less than the minimum contractually provided for base salaries for Dubow and Martore, and ignoring any voluntary reduction of their salaries) and (b) the greater of (i) the amount of the executive’s annual bonus earned with respect to the year ended prior to the year of termination, or (ii) the average of the executive’s three most recent annual bonuses as of the date of termination."

In 2010, Dubow's base salary was $1.2 million, an amount he voluntarily reduced to $1 million beginning Nov. 1, 2008. His cash bonus was $1.75 million. That is the highest of his three most recent bonuses. In 2009 and 2008, his bonuses were $1.45 million and $875,000. (Table lists salary and bonus payments for all six NEOs last year.)

GCI is the largest U.S. newspaper publisher by circulation. It has nearly 100 dailies in the U.S., including USA Today, and the U.K. It also owns 23 U.S. TV stations, plus hundreds of other media businesses, employing more than 30,000 workers.

The proxy report's Page 46 details potential disability payments to Martore and the other four officers: Chief Financial Officer Paul Saleh, U.S. newspapers division President Bob Dickey, USAT President Dave Hunke, and broadcasting division President Dave Lougee.

Other non-cash disability benefits
In addition to the $37.1 million in payments, Dubow also is entitled to the same other benefits promised him if he left via a conventional retirement, the report says, in footnotes on Page 44 and 47. They include:
  • Supplemental medical insurance coverage that extends to his family, plus a Medicare supplement and reimbursement for the cost of Medicare Part B coverage, beginning at age 65 and continuing for life.
  • Legal and financial counseling services on the same basis as available to an active executive at the time his employment terminates, for three years after his employment terminates, at an estimated incremental cost to the company of approximately $25,000 annually.
  • Use of company aircraft "for three years after his employment terminates, at times not inconveniencing the company, the cost of which would be reimbursed by Mr. Dubow at the company’s then-effective incremental hourly rate."
  • Ownership of existing home office equipment would be transferred to him.
  • Home computer assistance, for three years after his employment terminates.
  • Use of an office, secretarial assistance and access to company facilities at no charge for three years after his employment terminates.
  • Access, for three years after his employment terminates, to "one country club selected by Mr. Dubow of which the company is a member at the time of his retirement and to which Mr. Dubow had access during the time of his employment, the usage cost of which would be paid by Mr. Dubow." 
These post-retirement perquisites would terminate, the footnotes says, in the event Dubow provides competitive services to a competitor of the company, as described in his employment contract. Corporate estimates the annual incremental costs to the company associated with these perqs of about $50,000.


  1. Any bonuses should be held for five years so the board can see just effective he has been, and how the policies of his reign of terror really affected the paper.

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  3. Furloughed Fury9/16/2011 9:50 AM

    Unfortunately for stockholders, this guy will get a big fat payday no matter what happens, which is what's wrong with the American economy today. Reward for failure at the top and a pittance for hard work at the bottom. way to live up to the Puritan work ethic!
    We should nickname him Hurricane Craig for all the damage he did and the fact that the survivors will be left to repair the wreckage, sans FEMA. Good riddens.

  4. Truly disgusting how this guy's compensation is utterly disconnected from the performance of the company and the compensation of the rank and file. Pension? Unaffordable for everybody else but him. Corporate governance is beyond broken.

  5. For the second time in a week, Jim has written another business story (about Gannett, of course) that outshines anything a (working) Gannett reporter could produce, and in a 24-hour cycle, no less. And all for what, $16K a year?

    I'm gonna have to agree with Professor Blair on this ...

  6. 11:41 As a big fan of Gannett reporters around the country I find your comment inflammatory, uninformed, malicious, condescending and ignorant. You are entitled to your opinion. Jim did a fine job no doubt. But to condemn our news staff in this manner is just plain myopic and silly. Ahhhh I know I feel better!

  7. He hurt himself (severe spinal deterioration) tripping on the stairs while walking off the Gannett corporate jet traveling on business several years ago, so I am sure he has a workers comp claim and lawsuit that he can put against Gannett.

    Seems like it would easy to put Dubow out on the range and let him go quietly.

    If they put Martyr Martore in charge, we will be screwed.

  8. The main word that came to mind the further I read down in this story was "piggish." I know to some that word might be a bit inflammatory, but his work in six years with Gannett wasn't SO amazing that he deserves so much of an increase in his already inflated golden parachute. Someone getting $22 million to retire and go away doesn't need increased disability payments. This looks like his greed to take as much as he can get from GCI's foolish board of directors and it's offensive to lower-income people who really need the extra disability payments to survive. AND, why on earth does a guy who is so disabled really need access to a golf course?

  9. Don't be fooled. He's not really leaving, it's just a ploy so he can be on the new season of "Undercover Boss"

  10. PLUS, if he retires from Gannett on disability he will more than likely receive much larger Social Security benefits than if he just retired without disability.

    $15 million extra for back problems? I know factory workers who were seriously injured in the course of their work with problems much bigger than Craig's who are lucky to just get their increased Social Security benefits. Pathetic.

  11. Cakewalkin' Craig.

  12. So, let's see. He's been averaging about $8 million a year in pay and benefits. That means if he goes out on disability, he'll get a little more than four years pay for doing nothing.

    Not a bad deal, especially since he's well below the average retirement age. Wonder if it bothers him that he fired people with ongoing medical conditions and that some of those folks are now finding it difficult just to pay their bills. All I can say is what an ass.

    Back pain is no fun, but if there's such a thing as karma, this may be an example of it.

  13. Good digging, Jim.

    Still, I feel sorry for the guy (I know, I know). No amount of compensation can make up for his loss of mobility and pain.

    Yes, the company's brought pain on thousands. But not even an evil robber baron should have to live with constant agony.

  14. If the pain in his neck, back, whatever is so bad it forces him out and he collects based on this "disability", he better NOT be spotted playing golf. If he is- he should be charged with insurance fraud!

  15. Apple working around Steve Jobs’ health issues was absolutely the right move to make. Gannett’s board tolerating another Dubow health related absence – with all due respect to his personal battle, given his “leadership” to date and the urgency of Gannett’s problems is not.

    Send Dubow packing, appoint an outside executive or board member as interim CEO and shake the hell out of this company from the top down to clean it out. Matore's departure would too be a given.

    The cast of characters across all of Gannett who’ve lead this company into this hole (many frequently mentioned this blog by name) are clearly not the ones to lead it out. Yet, as this company shrank that same lot further enhanced and/or consolidated more powers into the hands of those who’ve trashed it, harming Gannett even more.

    Sack them all, place new leaders throughout all of Gannett (new outside CEO included) who truly respect employees and their views, encourage more entrepreneurism and creativity and let Gannett properties choose the best technology offerings this company has to offer – even outside it - that works best for their markets versus ramming one-size fits all edicts down the throats of all.

    Frankly, the positives that would result would be amazing, and why not as it sure as hell beats the trajectory this company’s current leadership has it on; which is ever down.

    The thought alone of doing this would pump employees up.

  16. I would never wish pain and suffering on another human being. That said, we will never see Craig Dumbow back at this company. This is a way for the board, who somehow finally put down their Vodka Martini's long enough to see this guy was a complete nothing at this company, to get rid of him. Awefully expense way to admit abject failure It's very possible we are in a bette position without him.

  17. Thanks for all your work on this post, Jim; you must've been up all night preparing this insightful information. To me, it doesn't matter whether Dubow leaves or not and Martore remains in control. Nothing will change: this company continues to tank, layoffs will go on, and the employees have everything to lose - Martore is no better or worse than Dubow.

  18. I have to agree with 1:54 & 2:38: clean house and throw out the entire, existing GCI management team from Martore to the bottom. A takeover, which unfortunately won't happen, would've been just the magic touch to ensure this.

  19. pay the man and get rid of him

  20. Gannett is totally hapless. Self-serving clueless executives are overseen by greedy mindless directors overseen by heedless institutional shareholders. Publishers and editors, with a few exceptions, are a lackluster lot who aren't smart or talented enough to offer anything to a blue-chip news or information company. And many employees are bottom-of-the-barrel types who skate by and actually thrive in Gannett's "good enough" expectation level. Nothing will save this company outside of its total breakup by a hostile raider.

  21. In "a just-filed 8-K notice to the SEC, Corporate said Dubow's medical leave is effective immediately.

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  23. Appreciate this fine reporting, Jim. Life is so unfair to all of us fools who have no choice but to work our a--es off for a living and live in fear about keeping a roof over our heads and food on the table.

  24. I have to agree with the earlier poster. We may all gripe and complain about DuBow making all that money, But Karma is real, and like they say, it's a Bi*tch! A wise old man once told me that everyone has their own private hell they have to live and deal with, and the better their life seems in contrast to reality, the worse that private hell is. I weep for those who have been ruined by Gannett after devoting their careers, but also console myself when I read things like this because This is DuBows karma pure and simple.

  25. Maybe $30 million is getting off easy. At least he won't be around to keep making any more bad decisions.

    It makes you wonder, though. How greedy can one person get? And what good are all those bucks if you can't walk? Oh, I forgot, he can have a few more buildings named for him at his alma mater.

  26. Mr. "I stole your dough DuBrow" please thank all of the shleps you furloughed, dropped raises, and fired. 33 mill, sounds pretty good to me while I am forced to kiss Gannett personnel decisions.

    Thanks for nothing. If the economy were any better (and we all could find new jobs) you would have no-one working for you and your ridiculousness excuse for a news program!

  27. Many of us knew hard working people in the pressroom/mailroom/circulation who slipped and fell or were otherwise injured around dangerous, loud equipment or on truck docks. Literally back-breaking kind of work that required dedication and working long third shifts. Gannett HR got people like them who were injured out the door and off the payroll. No big payday. Just a remainder of life with pain and a pittance of SSI.

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  29. Here is what is sad. Jim did a nice job but it was all in the proxy. Based on the shock expressed here it is obvious you've never read it. Now that's scary. Complain but don't educate yourself about your employer. Educate yourself people. Getting your financial news here is like getting your world news from John Stewart!

  30. 8:51 makes a good point. But I suspect 90% or more of investors don't read proxy reports, including especially the footnoted fine print.

  31. Most people don't know how to read a proxy and determine what's important and how to interpret it. That's why we have professional journalists. Thanks, Jim.

  32. 11:52. You're welcome. I enjoy this kind of reporting. Some day -- soon -- I hope to find a publisher willing to pay me a living wage to do this kind of work.

  33. And if you do, Jim, we'll be sure to pass along your history from this blog so he'll know what a mistake he made.

  34. our organization lacks leadership. unless something happens quickly to appoint strong leaders that have vision for the COMPANY and the ability to make things happen rapidly there is no way the front line can plug the hole in this sinking ship.

    Our leaders have no appreciation or respect for the people that are on the frontline. Companies that thrive are those that treat their employees with respect.

  35. Dubow needs to take some lessons from Scrooge.

  36. Dubow needs to watch a rerun of "It's a Wonderful Life."

  37. 12:34 a serious question. Why would any employer want to hire someone who has clearly demonstrated that they will turn on said employer when it is convenient? No matter how you spin it you've done everything in your power to humiliate executives and lower level leaders. So why would any employer want to risk hiring a proven disgruntled person. As you are quick to point out these leaders are all stupid. But are they that stupid?

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