Wednesday, October 05, 2011

What the 'millionaire's tax' could cost GCI execs

Senate Democratic leaders today proposed a 5% surtax on people with incomes of more than $1 million a year to pay for job-creation measures sought by the White House -- a proposal that could cost Gannett's senior executives hundreds of thousands of dollars in additional taxes.

Sen. Charles Schumer, D-N.Y., said the surtax would impact any income earned by people above $1 million annually, according to The Wall Street Journal. It would also impact dividends and capital gains. Schumer initially said it would be in place for 10 years, but an aide to the lawmaker later said the measure would be implemented permanently.

For most Americans, details about annual income are private. But for a select few -- chiefly, top corporate executives -- some information is public. That makes it possible to estimate the proposed surtax's impact on executives including CEO Craig Dubow.

In his case, the surtax could cost him as much as $94,000 in additional annual income taxes, and possibly much more, assuming his GCI pay remained the same as it was last year. I base that solely on his salary, bonus and pay for life insurance and other such benefits: a combined $2.9 million, according to GCI's annual proxy report to federal regulators.

Dubow's total 2010 pay last year was $9.4 million, but that included the estimated value of compensation, such as stock awards, that wouldn't be reported as income until a future date.

Some caveats 
Dubow likely has other income, such as dividends and capital gains on investments, that aren't reflected in my estimate, because that information isn't public. As well, he may have losses that could reduce his taxable income. All that would weigh on any surtax he might pay.

Indeed, GCI provides legal and financial services to Dubow that he could use to legally reduce his taxable income. The value of those services are included in the $159,465 in "all other compensation" he got last year.

Using my formula, following are the estimated annual surtaxes GCI's other four highest-paid executives last year might pay:
  • COO Gracia Martore: $61,334
  • U.S. newspapers division President Bob Dickey: $14,136
  • Broadcasting division President Dave Lougee: $3,386
  • USA Today Publisher Dave Hunke: $0
Surcharge push back
Opponents of higher taxes on the rich say such measures would actually depress employment, because -- in their view -- wealthy Americans invest in business ventures that create jobs.

That is debatable. What isn't, however, is the fact that, under Dubow, GCI has eliminated 20,000 jobs since he became CEO in 2005.


  1. Not only the 20,000 jobs lost during his tenure, what about the billions he has lost in market cap? What would have happened to me if I had lost the company billions of dollars in market cap when I worked there? Probably promoted actually. I can just here Dubow now, "son, you lost this company billions in equity! Well we all been there good ole boy. I like the cut of your jib. How about joining the executive commity?"

  2. Have you ever heard of the term "gross up"? I promise you GCI execs have...

  3. I have heard of the "Peter Principle". However, in Gannett you dont stop at the point of incompetence.

  4. I feel just awful that a man who fired 20,000 workers may have to pay some extra taxes on his ill gotten lucre. Is there anything we workers can do to ease his pain? Perhaps take more furloughs, straight out salary cuts or perhaps get fired. Please someone help him.

  5. Putting a face on why a lot of employees are so pissed at Gannett and the way they run their business... There's the Occupy Wall Street movement that seems to be picking up steam. I think this movement dovetails nicely with Gannett's greedy titans and their unapologetic attitude toward pay, bonuses and benefits for failure.

    Occupy Wall Street link...

  6. Great point 4:56 PM, one I suspect many proponents of this latest of questionable taxes in Congress and the White House have yet figured out as in the end, more cuts will be made to support it. To be fair, we also grossed up $25/50 holiday gift certificates to employees years ago so they got the full amount.

    Regarding what’s proposed (a 5.6% tax) I’m no fan of this board for what it approved or of Dubow et al (I’d sack a lot of them) for not having the good character to decline more of what was given, including Gannett Foundation monies. However, the simple fact is if revenues are down, companies need to reduce costs and in Gannett’s case, it’s been a lot.

    Unfortunately, short of a disruptive breakthrough of its own, Gannett’s revenue will never rebound which means more cuts will come. And that’s the reality that too many here can’t accept let alone that who’s ever in charge should rightly be OFFERED added perks and bonuses to lead. Those amounts are a discussion for shareholders and not for the antics of those protesting on the streets or with politicians seeking political gain.

  7. For the love of Mike, when are those morons in Washington going to figure out trickle-down doesn't work?

  8. the chairman has resigned. long live the chairman!

    GCI at 20 or bust !!!!!!!!!


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