When digital-first doesn't include a pension

"I guess what John Paton means by 'not your grandpa's newspaper company' is that 
grandpa had a pension."

-- John Gapper, Financial Times columnist, in a Twitter post about the news yesterday that Journal Register Co. has filed for bankruptcy court protection -- the second time in three years. Paton is CEO of Digital First, which runs Journal Register and MediaNews Group, Gannett's partner in the Detroit newspaper agency. Gapper rightly highlights Paton's worrisome remarks about "unsustainable" employee pension costs.

Earlier: GCI slashes planned pension contributions by 20% for 2012. Plus: Paton to lead MediaNews and Journal Register.

Pension Confidential | Issue 7.20.12

At the request of readers, I've created this forum exclusively for comments and news about Gannett's pension plan, a retirement program benefiting about 50,000 current and retired employees.

Planned 2012 pension contributions slashed 20%

From CEO Gracia Martore's presentation this morning to Wall Street stock analysts after the second-quarter earnings release, according to Seeking Alpha's transcript:

We've contributed about $76 million to the pension plan through the first half of the year. Our guidance had anticipated contributions of approximately $118 million in 2012. However, recent changes in legislation have reduced the required funding in the near to medium term. We now anticipate that we will contribute a total of $94 million for the entire year.

At the end of this year -- at the end of last year, our principal pension plan was about 82% funded. The impact of the new legislation will move the funded percentage up to the 90% to 95% range. We expect there will also be an impact on next year's funding, but it is still a little too early to call.

Earlier: Why you should worry about the pension plan's financial health.

Mail | Should you be worried about the pension plan's financial health? 'In a word, absolutely'

Regarding New York Times media columnist David Carr's warning this week about newspaper pension plan finances, reader Peter Beller writes:

Pension funding status is the value of the plan's assets (stocks, bonds, cash, etc.) minus the present value of its liabilities (all the cash it will have to pay out to current and someday retirees, discounted back to today). Swings in the financial markets do move the values on the asset side, but the biggest determinants in these estimates (and they are estimates) are two key figures: the estimated rate of investment return on assets and especially the discount rate used to calculate the liabilities side.

Gannett's 2012 10-K statement filed with the U.S. Securities and Exchange Commission, which says it is underfunded by $560 million, notes that a half-percentage-point change in the discount rate is uses would result in a $106 million change to the estimated obligations of the pension plan.

So is Carr right to be worried? In a word, absolutely. Comparing Gannett to the universe of financially robust U.S. corporations does not make sense. To compensate for lackluster investment returns the company will have to fund its pension from free cash flow (the dividend would be a good place to start). And corporate pension owners rarely use conservative rates to make their pensions look even worse than they are (Gannett thinks it will make 8.75% a year on its investments) so it is reasonable to assume that a credit analyst from Fitch might take issue with Gannett's accounting figures.

One thing Carr forgot to note is that a major reason most corporate plans (including newspapers's) are underwater right now is that bond rates are the lowest they've ever been and regulators require companies to use those rates to discount their liabilities, so lower rates mean higher estimated obligations in the future.

If bond rates were to increase, those estimates would go down (although the bonds held as investments would drop in value, too).

As always, other views are welcome. Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

A pension plan report that's worth a closer look

As I've written this winter and spring, there's no doubt Gannett's main pension plan isn't as robust as it could be.

The Gannett Retirement Plan, which benefits about 50,000 current and former employees, is underfunded by as much as $560 $500 million, according to documents filed with U.S. securities regulators.

That means if all things remained the same -- the number of people owed benefits, and the amount set aside to pay them -- the plan would come up short. Under the worst-case scenario, the plan has about $1.8 billion in stocks and other investments, but would need $2.3 billion to pay all claims.

But I don't believe things are as bad as appear in a new published report about newspaper publishers and their pension obligations. In his column today, New York Times media writer David Carr quotes a Fitch ratings analyst, Mike Simonton, saying GCI's plan is underfunded by an amount nearly twice as high: $942 million. Carr's column isn't specific about the source of Simonton's figures.

Corporate has published two reports this year that offered two different figures on the plan's funding: In February, the annual report said it was underfunded by about $560 $500 million. More recently, in April, the figure was a lower $415 million. The reports didn't explain the differing amounts, which may have been due to changes in the value of assets amid swings in the stock market.

A worthy red flag
To be sure, it's common for U.S. pension plans in all industries to be underfunded because companies aren't making big-enough contributions. Employers assume that, over time, pension assets will increase in value with rising stock markets. And GCI's was in better shape than many, according to the February report, which said the plan was 81% funded vs. a 74% national average.

Still, the thrust of Carr's column is worth paying attention: Newspaper publishers have struggled to make sufficient contributions to their plans because advertising revenue has been in a tailspin. At some companies, Carr says, the situation could grow so grave, publishers will seek bankruptcy court approval to walk away from their plans. That would force the Pension Benefit Guaranty Corporation, a government-sponsored agency, to assume responsibility for failed plans -- without promising to pay the full benefits owned.

Bear in mind, employers aren't required to offer pensions; these are voluntary benefits more typical in older industries. Newer businesses, especially in the technology sector where GCI now competes, usually don't sponsor pensions.

GCI's contributions last year weren't enough to close the funding gap. It added just $33 million during 2011 vs. $130 million in 2010. To be sure, the company pumped in more money early this year -- $54 million -- and expects to add up to another $64 million by the end of the year.

Frozen, but not forgotten
But unlike another publisher in Carr's story, McClatchy, GCI has greater financial resources. It has boosted its relatively generous dividend to pay $1.3 billion to shareholders by 2015. That's a financial stream that could be re-directed to pension support -- although Wall Street would then punish GCI's stock. And this assumes that the company's revenue doesn't crumble further; that would endanger the dividend.

The Gannett Retirement Plan was frozen for substantially all employees in 2008 as the company raced to cut costs during the industry-wide plunge in advertising revenue. Nonetheless, it remains the biggest of four company-sponsored plans benefiting more than 30,000 current employees and thousands more who have already retired.

GCI's main retirement vehicle is the 401(k) plan, where the company matches some of the money contributed by employees. Unlike the pension plan, all the 401(k) money is the employees' property once the vesting requirement is met. Companies may walk away from pension obligations, but that's not an option with 401(k)s.

Corporate releases annual report on pension plan

In a memo yesterday, Corporate sent employees an annual report on the state of the company's main pension plan, called the Gannett Retirement Plan. (See full memo text, below. I've posted the five-page annual report here.)

A reader who forwarded the report to me today asked what I thought about the funding levels it details.

First, the figures in this Annual Funding Notice are substantially similar to the numbers Corporate reported to the U.S. Securities and Exchange Commission in February. (I wrote about those SEC numbers here.)

To get to my reader's question: The most recent funding level in yesterday's report -- 81% -- is better than the 74% national average, according to a February report by BNY Mellon Asset Management. In other words, as of Jan. 1, the retirement plan held 81% of the stocks and other investments needed to meet all its obligations to retirees.

Of course, everyone would like to see their pension plan funded at 100%. As Corporate itself says in the report: "The higher the percentage, the better funded the plan."

Theoretically, over time, the pension plan's assets will grow sufficiently to cover all its obligations.

But keep in mind that I'm not a pension expert. Readers with more experience may weigh in with comments of their own.

Text of memo
From: Gannett Benefits
Sent: Friday, April 27, 2012 10:03 AM
Subject: Gannett Retirement Plan - Annual Funding Notice

Dear Participant,

The Pension Protection Act requires pension plans similar to the Gannett Retirement Plan to provide all participants with an Annual Funding Notice. This notice is required for most pension plans that are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal agency, regardless of the plan’s funding status.

The format and wording of this notice is largely dictated by the Department of Labor and is similar to the notice provided last year. The attached Annual Funding Notice provides information for 2011, the most recent complete plan year, and includes the following:

• the Plan's funded status
• a statement on the Plan's assets and liabilities
• the funding and investment policies of the plan
• the asset allocation
• a description of what benefits are guaranteed by the PBGC

As federal regulations require, this notice discusses rules governing terminated plans and benefits payable by the PBGC in the event of plan termination. Please note that while the Gannett Retirement Plan was frozen for most employees, it was not terminated.

For more information about this notice, including additional contact information, please refer to the section entitled “Where to Get More Information”.

Report: Main retirement plan's value sank in '11

The main Gannett retirement plan benefiting the vast majority of employees and retirees lost ground last year, after asset values fell and projected obligations rose, according to the annual 10-K report to U.S. securities regulators filed last week.

The report says the value of the Gannett Retirement Plan's portfolio of stocks and other investments dipped to $1.78 billion as of Dec. 25, while projected obligations rose slightly, to $2.33 billion.

That meant the GRP's funded status sank to 76% from 85% in December 2010. (See table, below.) Still, that was in line with the 74% average for typical corporate pension plans, BNY Mellon Asset Management said in a report this month.

The company's contributions during the year weren't enough to make up the difference. Gannett contributed just $33 million during 2011 vs. $130 million in 2010.

To be sure, the company pumped in more early this year -- $54 million -- and expects to add up to another $64 million by the end of the year, according to the report.

The GRP was frozen for substantially all employees in 2008 as the company raced to cut costs during the industry-wide plunge in advertising revenue. Nonetheless, it remains the biggest of four company-sponsored plans benefiting more than 30,000 current employees and thousands more who have already retired.

For details on the other three plans, see note No. 8 on the retirement plans, starting on Page 63 of the 10-K.

Protected -- to a point
Private pension plans like Gannett's are protected by a U.S. agency, the Pension Benefit Guaranty Corp. But there are limits to that protection. Learn more with this FAQ.

This table shows GRP data for the past four years; (bigger view). Note: Dollar amounts are in thousands:

Amid good pension news, big cautions lay ahead

[2008 annual report reveals total underfunding of four plans]

President and Chief Operating Officer Gracia Martore disclosed welcome news this month about the Gannett Retirement Plan, the biggest of four pension plans benefiting most of the company's nearly 40,000 employees. Because of surging stock markets last year, the value of Gannett's main pension plan investments rose about $150 million, she told a Feb. 1 teleconference of Wall Street stock analysts. That was good news for employees and investors because it bolstered Gannett's ability to pay retirement benefits; investment assets, after all, are the source of those payments.

But Martore didn't report a key piece of information: the plan's overall funding levels -- the assets required to meet all estimated current and future benefit payments. That is a figure now disclosed once a year in the company's annual 10-K report, filed with federal regulators. We'll get fresh information when the 2009 report is filed with the U.S. Securities and Exchange Commission as soon as this week.

The last 10-K report, covering 2008, revealed a sobering view of the Gannett Retirement Plan ("GRP" in the table, above). At the end of that year, it was underfunded by about $587 million. That was for two principal reasons: a sharp decline in the plan's stocks and other investments during the year, one where the great recession sent markets tumbling. (Those of you invested in the company's 401(k) plan experienced similar declines.)

The other reason: Gannett hasn't contributed to the plan since adding $50 million way back in February 2004, according to annual 10-K reports. What's more, Gannett isn't facing mandatory contributions this year, Martore told Wall Street analysts after GCI reported fourth-quarter earnings. "We may look at doing something on the voluntary side; but it would not be of significant scope,'' she said during the question-and-answer portion of the conference.

Underfunding: Gannett isn't alone
Many companies have underfunded pension plans. The 100 biggest U.S. pensions were just 79% funded in 2008 vs. 109% funded at the end of 2007, according to consultant Watson Wyatt Worldwide. That means they had 79 cents set aside for every dollar owed to current and future retirees, The Boston Globe reported.

Gannett gave itself some relief by freezing the plan's benefits in August 2008, which limited future expenditures. If stock markets continue rising, the value of the plan's assets should rise, too. Also, assuming Gannett's financial situation continues improving, the company could resume large plan contributions.

But as investment professionals say, past performance is no guarantee of future results. The stock market could dive again; as I write this, the Dow Jones Industrial Average closed down 100 points today. And Gannett's revenue and profits could suffer unexpected, additional declines if it can't stem advertising losses to online competitors; that could pinch GCI's ability to fund the pension plan.

What's more, Gannett's total pension underfunding is actually much bigger than the $587 million in the main plan at the end of 2008. The company is on the hook for three other plans: one for U.K. employees in the Newsquest newspaper chain; another supplemental plan for a small group of senior executives, and a third "all other" plan, which the company doesn't appear to detail in the annual report.

Combined, those plans had a total underfunding of nearly $892 million at the end of 2008. (See the table, top.) We'll know the status of the four-plan underfunding when the 2009 report is filed, as I said, as soon as this week.

A cautionary note
I am by no means an expert on pensions. The subject's complexity is reflected in the fact that the word pension appears at least 44 times in the annual report. Employees and retirees who are concerned about their benefits should consult an accountant or other retirement professional. My observations here are meant only to start a discussion on the subject.

Current and retired Gannett financial professionals, please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.

Stripped to a 'flying gas can,' we start the final leg

Back in January, Anonymous@7:10 a.m. recalled today, I compared management's strategy to a scene from Hunt for Red October, where they stripped down a helicopter to make it a "flying gas can."

In the aftermath of last week's much-discussed Deal Magazine article, "the comparison is even more valid," @7:41 a.m. writes. "We now know where they were flying to: to make the bond payments. But now they are pouring the gas out to make the helicopter lighter. Will they realize you can't fly without gas? 
Please find a buyer.
 For all its faults, Gannett did have some smart ideas. And perhaps could have emerged from this as the champion in journalism. It's such a shame."

Word for word, here's my original January 2009 post:

Gannett has been on a journey to an all-digital future from the moment it was founded more than a century ago in central New York's Elmira. But now, our weakened company has begun what may be the most perilous leg -- one it may not survive.

This moment recalls the 1990 Cold War thriller, The Hunt for Red October (trailer, below), based on Tom Clancy's bestseller. CIA analyst Alec Baldwin is aboard a U.S. aircraft carrier, desperate to cross a dangerously vast stretch of ocean. Admiral Fred Thompson says there's only one way: by racing a helicopter, stripped of all unnecessary weight. "A chopper turned into a flying gas can," he warns grimly.

That is what Corporate has been doing at an ever-quickening pace for more than a year now: Stripping Gannett of all but its most profitable, revenue-producing parts, in preparation for this final passage. The restructuring has now assumed greater urgency, following the credit crisis and September's Wall Street meltdown.

We get a fresh progress report on Friday, when media stock analysts expect the company's fourth-quarter financial report will show another double-digit profit plunge. (To be sure, the New York Times Co.'s beat-the-street report offers a ray of hope.) Gannett shares closed today at $7.33, up 29 cents. Still, GCI is down 80% from a year ago vs. a smaller 35% decline in the broader S&P-500 index.

Dismembering you
Far from Wall Street, Gannett's bid for survival has been quietly playing out in a big customer-service call center in Louisville, Ky., serving 22 of the 85 U.S. papers -- mostly in the East. There, scores of operators read from company-prepared scripts this month, describing the slow dismemberment of The Courier-Journal and the 21 other papers -- including the first one, in Elmira.

This poignant chapter in American journalism history is told in an otherwise routine, three-page company document I got from a reader. It's a cheat sheet for operators responding to bewildered and frustrated subscribers, calling from distant places about cutbacks in news and delivery.

But to future historians, the document would help explain the industry's early 21st century decline. They would discover that newspapers didn't all die overnight, much as Corporate just threatened the Tucson Citizen. Instead, publishers morphed into corporate chop shops, stripping their legacy papers of financial and intellectual capital -- piece by piece.

In Louisville, where the Courier-Journal holds 10 Pulitzers, they carted off the crafts column on Jan. 6. In Rochester, N.Y., where Gannett was based nearly 70 years, the Democrat and Chronicle lost a second Friday sports front. Even little Elmira wasn't spared: They cut the Star-Gazette's Monday business page.

And so it went, paper after paper, the operators explained -- from spiking Monday and Tuesday op-ed pages at New Jersey's Pulitzer-winning Asbury Park Press, to Saturday features at The Daily Journal in Vineland. Reduced. Combined. Consolidated. Eliminated. Cut. Killed.

Throwing weight overboard
To be sure, Gannett has taken far more dramatic steps, in stripping down to gas-can battle mode: Dumping 2,200 jobs last month alone. Freezing the pension plan. Writing off nearly $3 billion in assets. Junking presses. Launching ContentOne. Furloughs.

Friday morning, CEO Craig Dubow will showcase all that and maybe more, when he speaks to Wall Street analysts after the fourth-quarter earnings release. The 10 a.m. ET analyst teleconference will be webcast. It's open to the public -- you and me included.

Continuing the recent trend of declining results, analysts forecast a 37% earnings dive, to 81 cents vs. $1.28 a year ago. Revenue is expected to be $1.79 billion, down 5.7%.

Earlier: Revenue and earnings, plus CEO Dubow's commentary, since fourth quarter, 2007.

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.


'The Hunt for Red October'
Here's the theatrical trailer:



Related: More video favorites on Gannett Blog's YouTube page

[Today's front pages, Newseum]

Monday Recap: GCI's fallen down, and can't get up!

You wrote 824 comments last week on posts that included:

Gannett's stock resumes trading at 9:30 ET this morning, after falling to $3.70 a share on Friday; for the week, GCI lost nearly 12% of its value. You urged the national news media to write about delays in pension payouts. Corporate discovered that employees found the "water cooler element of a blog to be very reassuring,'' and said it might actually launch a blog of its own; no word on whether this will happen in 2009, however.

Story idea for WSJ, NYT, WashPost beat reporters

In the following comment, Anonymous@9:38 p.m. says there's a story in the growing desperation among GCI employees seeking pension payouts -- in some cases, so they can make mortgage payments amid rising foreclosures:

Sounds like the problems with the pension payouts to laid-off workers would make a good story in some other company's newspaper. Maybe The Washington Post would like to hear from those who are trying to get their money. Gannett is a local company in the Post coverage area.

Let's tell the Post our story. I think Howard Kurtz is the media reporter. Or maybe it's more of a business story. Either way, it's a newsworthy story. . . . a company screwing over ex-loyal employees after they were laid off. I, too, was hoping to use that payoff as a reserve to hold me over once severance is over. It's my money and I don't understand this incredibly immoral if not criminal delay.

Jim, can you post something telling people how to get in touch with The Washington Post about this pension payout fiasco or suggest another national media outlet that might be interested in this story? Maybe a little bad exposure in a real newspaper will help hundreds if not thousands of us get our damn money.

Missing pension payout? Tell your story here!
Editor Jim Hopkins says: Tell the national news media about your pension lump-sum delays. Spare no details: When did you first apply? How many phone calls made, or letters sent? Did a payment fail to arrive on a promised date? Why do you need the money now?

Please post your replies in the comments section, below. If you're willing to be interviewed -- even off the record -- then shoot me an e-mail via gannettblog[at]gmail[dot-com]; I can handle any introductions with inquiring reporters.

[Image: today's front page, Newseum]

'Right now, I feel a huge target on my back'

Most of Gannett Blog's more than 40,000 unique visitors over the past month were company employees. Yet, as one of the industry's most widely read blogs, it also attracts thousands who never worked for the company -- including Anonymous@9:21 a.m., who writes:

I seek advice from my brothers and sisters in Gannett-land, especially those who have left the company voluntarily or otherwise in the past two or three years. I know many of you personally and wish I did not have to post anonymously, but circumstances dictate otherwise. You are good folks and I've enjoyed our relationship. I am very sorry to see what is going on at many of your newspapers.

I am a manager in another media company that is cutting staff through attrition and layoffs.

I don't know whether I would be one of those let go. I'm a good worker and have worked to expand my skills and take on new responsibilities. But I know there are times when that is not enough. I am in my upper 50s and have been with this company 30 years. Right now, I feel a huge target on my back.

In the event I am on someone's "disposable" list, before I get called into an office and asked to sign papers I would like to be prepared. For those of you who have been through this before, what advice would you give? What things do I need to know going in regarding my rights? Entitlement to my pension? 401(k) plan? If I can, should I be taking steps to protect those two programs (pension and 401(k)) now?

As a management employee we worked without a contract, although the company generally gave us the benefits of the union agreements covering a portion of the company's workforce plus some additional enhancements. Do I need to be aware of the current and post union contracts going in?

I have thought about getting the advice of an employment lawyer in the state in which I work. Did anyone else do that?

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.

[Image: today's Detroit Free Press and Detroit News, Newseum. Blog readers say the Gannett-controlled Detroit Media Partnership just laid off about 100 employees; that joint operating agency publishes the Freep and the News. The Freep is one of Gannett's 85 dailies in the U.S. dailies, and 17 in the United Kingdom]

Text of key questions, answers about furloughs

Following is an FAQ that Gannett gave employees today about the company's just-announced mandatory, unpaid one-week furloughs.

Q. Why has the company decided to do furloughs?
A. Experts are forecasting continued economic weakness for many months to come. While we need to continue to reduce expenses to ensure the overall health of the company, we also need to continue our operations and deliver for our customers. Several alternatives to layoffs have been proposed, but the one that seemed the fairest and the least damaging to our operations at this time was a furlough program. We hope it will minimize the need for layoffs and give us more time to monitor and assess the economic trends and realities.

Q. Is everyone going to participate?
A. All levels of employees in all divisions in the U.S. and the corporate staff will participate to some degree, depending on a variety of factors. That includes U.S. Community Publishing, which is beginning its program immediately; USA Today, broadcast and digital. Union-represented employees will be asked to participate in lieu of layoffs. Top executives in the company are participating. Newsquest is taking other expense reduction measures at this time.

Q. This is a financial hardship for me. Can there be an exception for me?
A. There will be no individual hardship exceptions. We encourage all employees to make use of resources such as the Employee Assistance Program (See question “What other resources do I have…”).

Q. Will there be any exceptions at all?
A. Certain essential employees will be granted exceptions as a group. Also, there will be exceptions for newly hired employees and for other individuals and units who are impacted by other expense reduction measures.

Q. How much money is the company saving by doing this?
A. Each unit has been asked to supply an estimate of the savings. A final number is not available at this time.

Q. Won't this compromise our ability to do our jobs, produce our products and satisfy our customers?
A. We think doing another round of layoffs at this time would impact our operations more. Furloughs, while a scheduling challenge, provide more flexibility for our businesses and provide more value for our customers.

Q. Why does this have to be done in the first quarter? Couldn't we have more notice?
A. The first quarter for most of our operations is comparatively quiet and the volume is less. Plus, economists believe the first half will be the most difficult. Action needs to be taken now to continue to bring costs in line with revenues for the first quarter. Waiting until later in the year may magnify the problem and result in more stringent action.

Q. Does this mean there won’t be any layoffs this year?
A. The goal is to reduce the need for layoffs, but that decision entirely rests on what happens with revenues during the rest of the year. No final decision has been or will be made at this time.

Q. Does this mean the company is in really bad shape?
A. Not at all. This means we are taking action to avoid the plight of some other companies and industries. Gannett is a solid company and we want to stay that way. Instituting furloughs at this time is a sound financial move by a sound company that is facing severe economic conditions.

Q. Have other companies done this?
A. Many companies outside our industry such as the auto industry routinely use furloughs to cut costs or manage inventory. Some of our peers are doing this or considering furloughs and/or other cost reduction measures at this time.

Q. Why can't I take a pay cut instead?
A. Pay cuts, salary freezes and reduced work weeks are other methods of reducing costs that have been considered and may be considered in the future.

Q. Can I give up a week of vacation instead?
A. No, because vacation days are paid so there is no savings to the company.

Q. Why are the rules different for hourly and salaried employees?
A. Hourly employees and salaried employees are subject to different rules set by the U.S. Department of Labor. Basically, salaried employees are paid for a week’s worth of work, not in smaller increments.

Q. May hourly workers take furlough time in part-day or hourly increments?
A. At this time, we are asking the furloughs be taken in full day units.

Q. If a salaried employee works while on furlough because of an emergency, can he or she then take a new furlough week later?
A. Every exempt (salaried) employee will need to complete the furlough as one full payroll week. Furloughs need to be scheduled so back-up personnel are available. If that is not possible, the furlough will need to be undone and rescheduled.

Q. Does the furlough include part-time workers?
A. Yes. The furlough should be based on their scheduled or variable time and should be a week’s work of time.

Q. Can I use part-time people to fill in for furloughed workers?
A. Not if it expands their hours and costs more.

Q. Can a salaried employee work on the weekends?
A. There can be no work done during the payroll week at all so it depends entirely on the employee’s regular schedule and their regular days off. See the chart below, which shows that a pay period is one week long, regardless of how often an employee is paid (weekly, biweekly or monthly).

Q. How will my furlough be scheduled?
A. Furloughs will be scheduled so that normal operations can continue without interruption during the furlough period. You will have an opportunity to discuss your schedule with your supervisor, who ultimately must decide what works best and what you need to do to prepare for your being out.

Q. Why can’t I do any work while I am out?
A. There are very specific rules that must be followed. Federal and state laws require that employees, whether hourly or salaried, must not work while on an unpaid leave. That includes reading or responding to e-mails, calling or responding to calls from colleagues and being on site at your location at any time during your furlough days.

Q. Who will cover my job while I am out?
A. You and your supervisor should discuss how your responsibilities will be handled while you are out. If you have a company e-mail address and/or phone extension, you should leave a message directing people to the employee designated to reply in your absence.

Q. If an employee works while on furlough because of an emergency, will he or she be required to take a new furlough at a later date?
A. Everyone will need to complete the five-day or one payroll week furlough requirement. If there is an emergency and you need to return to work, a new furlough will be scheduled for a later date. Your supervisor must approve your return to work in advance.

Q. What happens to my benefits while I am out on furlough?
A. Benefits such as your health and life insurance continue during your furlough. Deductions for your health and optional life insurance coverage will be taken out of your paycheck for any week in which furlough day(s) are taken. You will continue to earn vacation credit during your furlough. If you participate in the Gannett 401(k) Savings Plan, no participant contributions and company-matching contribution will be made for the time you are not paid while on furlough. You are not eligible for a distribution of your pension benefits while you are out on unpaid leave. Garnishments will continue to be taken.

Q. Am I eligible for state unemployment benefits while I am out on furlough?
A. Unemployment benefits vary by state. Some states have waiting periods before unemployment benefits commence; others do not. You should contact your local unemployment office for more information.

Are you ready to take a one-week pay cut?

In another cost-reduction move, tipsters say, Gannett is about to announce that U.S. newspaper workers -- as many as 30,000 -- will be required to give up a week's pay in the current quarter. If true, the unpaid furloughs could be one more ingredient in the rumored February payroll cut. Another unknown: Whether any of this applies to Newsquest, broadcast or other businesses.

An announcement would likely be presented this way: Everyone gets to take an extra week's vacation (fun!) -- but they won't get paid for it (not so fun!). That's how The Seattle Times sold the news to staff last month.

But, let's get real: Many conscientious or just-plain-scared employees at the Detroit Free Press and other Gannett papers will work right through an unpaid week off for a simple reason: because they can. Their jobs require only a computer, Internet access and a cellphone. The pressure will be huge to "just check e-mail now and then" or "make a few quick phone calls" while on these unpaid vacations.

Comparing to unpaid OT
Readers are already praising -- and dreading -- Gannett's possible move. "It sure would be better than laying more workers off or more downsizing of the papers,'' Anonymous@5:38 p.m wrote yesterday. "But man, oh, man, it's rough when someone goes on vacation to get the extra work done. . . . I shudder at the thought of everyone in my department getting an 'extra' week off."

Anonymous@5:56 p.m. brought it back to reality: "With all the unpaid overtime that's talked about here, does that really mean you'll have to go to work without punching in for that week?"

The current quarter ends March 31. Assuming this goes through, plan on supervisors telling you that these weeks must be booked by the end of the third period -- company accounting lingo for March. (When does third period end this year?)

Is 401(k) next?
A reader asks whether the company's contributions to employee 401(k) retirement accounts are endangered. That sounds possible to me, even though it's been only seven months since Gannett froze the pension plan for all but a few. Indeed, what other steps might Corporate take soon, beyond furloughs, layoffs and possible further cuts to benefits? Is anyone hearing about newsroom features department jobs getting targeted?

And speaking of Detroit . . .
That's today's Freep front page, from the Newseum. I thought I saw a comment saying the Freep is freezing all non-union wages this year. But now I can't find it. Can anyone confirm -- and add details?

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.

Reader: Four months later, still no pension payout

In an e-mail signed, "Frustrated in Ohio," a reader asks:

Any other complaints of little or no action on pension payouts from the August layoffs? Can you believe it's been four months and still no check? I have contacted Corporate a handful of times and always the same run around: "If you don't get the check in two weeks, call back." Two weeks later, and the same thing! Can they legally take this long to pay all of us?

N.C. university concedes Gannett Foundation gave 'support' to scholarship fund honoring Dubow, wife

Craig and Denise Dubow's signatures are visible on a Western Carolina University contract creating a scholarship fund restricted to children in three North Carolina counties. Paragraph IX requests that winners "send a letter of thanks to Mr. and Mrs. Craig A. Dubow."

Under pressure, Western Carolina University has now acknowledged that the Gannett Foundation quietly helped CEO Craig Dubow and his wife, Denise, establish a scholarship in their name -- with no credit to Gannett, and off-limits to most employees' children.

The university, in Cullowhee, N.C., disclosed the foundation's role in the Craig A. and Denise W. Dubow Endowed Scholarship Fund yesterday, only after I filed an open-records request last week for any public documents that could explain the whereabouts of $40,000 Dubow funneled to WCU in 2007 and 2006.

The gifts were authorized under a benefit available only to Dubow (left) and a handful of other highly-paid current and former executives, several of whom have used foundation money to fund scholarships in their names, too. Dubow, 54, was paid $7.5 million in cash and stock last year. Much of that stock is now worthless; shares have plunged 79% from a year ago.

There's nothing illegal here. But Dubow's actions, combined with the foundation's refusal to fully disclose them, show how brazenly Gannett pampers the top brass -- even as it slashed thousands of jobs, froze the pension plan, and imposed other harsh steps to restore prosperity. Only yesterday, Dubow warned: "Next year will continue to be difficult."

Connell's conflict
Foundation Executive Director Tara Connell -- who also is Gannett's chief spokeswoman -- has not acknowledged any of my questions about the foundation for nearly three weeks. She is in a deeply conflicted position: Connell ultimately reports to Dubow; in addition to being Gannett CEO, he is the foundation's chairman, president, and one of its seven unpaid officers.

And until now, Clifton Metcalf, executive secretary of Western Carolina's fundraising arm, had refused to disclose anything about the $40,000, including whether it went to the Dubow fund. But in an e-mail yesterday, Metcalf wrote: "I have been authorized to confirm that The Craig A. and Denise W. Dubow Endowed Scholarship Fund has been created with the support of the Gannett Foundation, not the Gannett Co. Inc."

He did not detail that support. But the foundation's public tax returns for 2007 and 2006 show Dubow directed two $20,000 grants to the school for endowed scholarships. The documents do not mention the Dubows' fund, however. I examined the returns under federal open-records laws.

Also, with his reply, Metcalf attached scanned copies of an agreement the Dubows signed (inset, left), showing they created the fund in November 2005. Asked for the source of money to be deposited in the account, the five-page agreement says: "Donations by family and friends.'' The Gannett Foundation is not listed as a source.

None of the documents explicitly reveal the whereabouts of the $40,000. Metcalf told me last week in a phone interview that WCU does not have any endowed scholarships named for the foundation or for Gannett, however. Big donors customarily get naming rights.

The Dubow fund is to hold more than $10,000, the documents say, and its endowment must exceed $20,000 before any scholarships are awarded. Finally, referring to scholarship winners, the document says:

"It is requested that the recipient send a letter of thanks to Mr. and Mrs. Craig A. Dubow, 7950 Jones Branch Drive address in McLean, Va.,'' Gannett's headquarters address.

Few rules for top brass
Last year alone, Dubow and 15 other current and former company executives directed $320,000 in foundation money to non-profit groups -- many of which would be off-limits to average employees and the public under foundation rules, public documents show. For example, rules applying to regular employees and the public say: "In any public acknowledgment or signage, be sure to note that this grant is from the Gannett Foundation."

That rule reflects an important but unstated foundation goal: To generate favorable publicity that could make Gannett businesses like North Carolina's Asheville Citizen-Times more prosperous, thereby advancing the interests of the company's beleaguered stockholders.

Dubow's gifts also wouldn't be allowed under a foundation rule that says: "The only scholarship program currently funded by the foundation is the Madelyn P. Jennings Scholarship Program for children of Gannett employees."

Yet, Jennings scholarships are scarce, the tax returns show. Last year, the foundation spent only $42,250 on the scholarships -- a total of 14, based on the award's current value -- for a company that employed 46,000 workers. The one-time grants are now worth $3,000 each.

Dubows exclude most employees
The foundation's stated mission is to help non-profit groups where Gannett owns a newspaper or TV station. The closest business to WCU is 53 miles away: the Asheville Citizen-Times. The paper is now losing about a third of its 240 employees to this month's mass layoff at Gannett's U.S. newspapers.

Asheville is in Buncombe County. Craig and Denise Dubow restrict their scholarships to students in nearby Macon, Transylvania, and Jackson counties. (See, map detail.)

The Dubows' interest in WCU is unclear. Dubow's alma mater is the University of Texas at Austin; the foundation gave a combined $40,000 to that school in 2006 and 2005, tax returns show. But Jackson County property records also reveal that the Dubows own a $1.5 million, 4,144-square-foot country estate in the gated Trillium golf community in Cashiers, which may explain why they established the WCU fund.

Note: Gannett Blog readers who asked to remain anonymous provided important research for this post.

Gannett Blog readers react
Your responses to this latest Gannett Foundation development are pouring in:

• "If Dubow doesn’t offer his head for his deceitfulness with Gannett Foundation funds, a foundation whose funds come directly from employee pockets and Gannett, then the board of directors should take it,'' writes Anonymous@9:41 p.m. "At a minimum, the existing scholarship should be changed to reflect the role of the Gannett Foundation. And, Dubow, you may be within legal boundaries, but your actions here demonstrate why you do not deserve to lead this company."
• "There are very good people in Asheville whose children could use this scholarship,'' says Anonymous@12:04 p.m., "but instead he opts to deny them this when the hard work they do has allowed him to buy his vacation home there? . . . I absolutely just can't get over the nature of the pure coldheartedness and audacity of it during this time of pink slips -- and that's the real story here."
• "I am a very senior person at Gannett (although not senior enough to receive the GMC perks) and I have to say that Craig Dubow and Gracia Martore have both lost the confidence of this management team,'' says Anonymous@1:48 p.m. "This is appalling and Craig Dubow should just resign. He truly is an embarrassment to the company, the loyal employees and this management team."
• "So," says Anonymous@4:09 p.m., "what this breaks down to is we, the Gannett employees, sacrifice our health, sanity and economic future so Dubow can be a big man on a N.C. campus and play a free round of golf? Unbelievable."
  

Earlier Gannett Foundation posts

• Documents reveal platinum benefit for elite executives
• Chief Financial Officer Gracia Martore steered $60,000 to her alma mater, Wellesley College. (More noteworthy examples.)
• Gannett sells paper after 36 years to help fund officers' gifts
• How to get and read a non-profit's public tax return
  

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.

[Image: today's Citizen-Times, Newseum]

Rochester Guild seeks pension error victims

On Friday, Rochester Newspaper Guild Secretary Gary Craig asked me to post the following. The 33% error rate he cites, below, for the pension statements Gannett sent to his Guild members is extraordinary. I, too, would like to know the extent of this previously undisclosed rate.

I'm writing in my role as an officer with the Newspaper Guild of Rochester and would like to hear from those of you who've had questionable experiences receiving your pension statements. Because we did not resolve our contract at the Democrat and Chronicle until July, we are receiving our statements this week. Unfortunately, there were significant errors -- acknowledged by Gannett -- in about a third or more of the statements received by our members. According to Gannett, the company that performed the calculations did not add in the pre-1998 years of service for anyone who worked with the company before that year. So one three-decade employee, for instance, received a statement with a pension calculation about a third of the actual figure.

After reading about the errors at other worksites on Gannett Blog, we had limited confidence in the likelihood these numbers would be correct in the first place -- and we have even less now. Union leaders spent much of the day Thursday sorting out who received erroneous numbers and, after a bevy of complaints, Gannett acknowledged the error.

Gannett, of course, wants to assure us that the problem is now resolved and thinks we should accept that the corrected statements will be accurate and that the numbers received this week for those who joined the workforce after 1998 were indeed accurate. You can understand our lack of faith.

We'd like to hear from those who got inaccurate statements earlier. We also wonder whether anyone ever saw the actual calculations with their specific numbers -- such as your specific final average salary multiplied by the various multipliers, etc. Granted, the formula is available, but we at the Guild wonder whether any employees who questioned or challenged their numbers were given the specifics of their individual calculations.

Gary asks that you please post your replies in the comments section, below. Or you may e-mail him directly via local17@rochester.rr.com.

Earlier: Ask Tara -- how many of the pension statements were incorrect?

[Image: today's Democrat and Chronicle, Newseum]

Attn: Human resources chief Roxanne Horning

"I'm very frustrated by their stonewalling."

-- Anonymous@12:35 p.m., commenting on HR's inability to provide a status report on when a lump-sum pension payout will arrive. See today's open post at Real Time Comments.

Text of Corporate's layoff instructions to publishers

Position Reductions in U.S. Community Publishing

Due to the difficult business conditions, USCP Division management is reducing positions across all levels.

Process
• Division management gives each site a reduced payroll dollar amount they must meet based on:
Unit’s financial performance
Previous reductions
• Sites decide how to reach this payroll reduction:
By not filling vacancies.
Through normal resignations and retirements.
And in most cases by laying off some existing employees.
• Division management with corporate must approve the site-submitted reductions
Protecting our content creation and sales capacity.
Assuring the reductions are consistent with the company’s strategic direction.
• Sites communicate the approved reductions to their affected employees

Estimated number of USCP position losses
• The payroll reduction amount translates roughly into 1,000 fewer positions in USCP
• Probably requiring around 600 people to be laid off
• Approximately 3% of USCP current positions

Timing
• By August 15th publishers send a letter to all their employees:
Explaining, in their own words, the points made in this communication.
Telling their employees the number of layoffs at their particular site.
Giving a date, or range of dates, when their employees will leave the company.

Severance Benefits
• One week of pay for each year of service (52-week maximum)
• Minimum two-week severance benefit
• Medical benefits will continue for the length of the severance period
• Employees laid off may begin receiving their pension plan and 401(k) benefits (depending on applicable laws)
• Government unemployment benefits may also begin after severance benefits end,
depending on state law

More job reductions to come?
• We would prefer no more reductions, but…
We must keep expenses in line with revenue.
If advertising and circulation revenues continue to decline, further payroll reductions may be necessary.
• This communication is about a particular USCP payroll reduction effort
Job reductions resulting from other changes throughout Gannett are not
included in this communication (such as the current project in accounting and finance to centralize some activities in two national shared services centers).

Acknowledgement
• These people leaving Gannett contributed to its growth and success
• We will thank them for their years of service and treat them in a way that acknowledges their valuable contributions

Reader: HR gave us false information, ignored us

Regarding former Detroit Free Press recruiter Joe Grimm's advice on evaluating buyouts, a reader says: "I took a buyout from the Indy Star and here's the reality: The terms were great, two weeks pay and healthcare for every year worked. However, when we started asking questions, they either didn't know the answers, gave us false information or ignored us. HR did very little to help us out, and now, a colleague whose health insurance ran out last month is STILL trying to get new insurance in place. HR says we can't go to them, we have to go to Corporate. Corporate jacks us around, says they'll get back to you, etc. This is HEALTH INSURANCE, folks, something we all need, especially us older geezers. So, while Grimm might have had all his ducks in a row, you're only as informed as HR wants you to be -- and guess how informed that is? Yeah, you've got it. . . ."

Join the debate, in the original post.

(Confidential to Gannett human resources chief Roxanne Horning: I found the HR departments at the four newspapers where I worked too often uninformed, unresponsive and sometimes downright surly. Why do you allow that?)

Earlier: Corporate 'screwed up' in pension errors