Gannett Co. slashed its chief executive's pay package by 60 percent last year, passing along the financial misery that has tormented the largest U.S. newspaper publisher as its stock price and profit shrank amid an industrywide drop in advertising revenue.
CEO Craig Dubow was granted 2008 compensation valued at $3.1 million, based on The Associated Press' analysis of figures Gannett filed with the Securities and Exchange Commission Wednesday. That's down from 2007 compensation of $7.9 million, which included estimates provided by the company of restricted stock and stock options that overstate what they are currently worth.
As big as the decline in Dubow's 2008 pay package was, it still fell short of the 79 percent plunge in Gannett's market value that erased $8 billion in shareholder wealth last year.
The AP calculations include executives' salary, bonus, incentives, perquisites, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. It is based on an amended SEC filing that includes changes Gannett made to explain the value of Dubow's stock awards more clearly than the McLean, Va.-based company's initial disclosures on Tuesday.
Gannett, which publishes USA Today and more than 80 smaller daily newspapers, has been scrambling to cope as the recession has exacerbated revenue declines from a years-long shift of advertising from the print medium to less expensive alternatives on the Internet, particularly with classified ads. Gannett's annual ad revenue from publishing fell 21 percent since 2006 to $4.15 billion last year.
Although it's considered to be in better financial shape than many newspaper publishers, Gannett still lost $6.6 billion last year. Most of the loss stemmed from non-cash charges to account for the crumbling value of Gannett's newspapers and the costs of eliminating more than 4,000 jobs last year, or about 10 percent of the company's work force.
Girding for even tougher times ahead, Gannett last month decided to cut its stock dividend for the first time in its history. The 90 percent reduction in the quarterly payout will deprive shareholders of about $325 million during the next year.
Beginning this year, the company also has stopped paying for Dubow's home security to save money.
Dubow's 2008 pay consisted mostly of a $1.17 million base salary and a $875,000 bonus.
The salary reflects Dubow's decision to lower his own annual base pay to $1 million in November from $1.2 million, a 17 percent reduction that will remain in effect through 2009. He also is relinquishing another $19,200 this year under a cost-cutting program requiring most of Gannett's U.S. employees to take an unpaid week off before April.
Gannett's board cut Dubow's 2008 bonus in half, to $875,000, after concluding that an even more drastic reduction wouldn't be appropriate because he and his top lieutenants had already been punished by the company's falling stock price.
All of the stock options that Gannett has awarded its top executives during the past eight years wouldn't generate a profit now because their cost to exercise the options is higher than the current value of the stock. The phenomenon, which is affecting more executives and even some rank-and-file workers throughout the country, is known as being "under water."
Dubow's compensation included another 235,000 stock options that were valued at $817,800 when they were awarded in February 2008. The options have an exercise price of $31.75, meaning Gannett's shares will have to rise by about 13-fold for Dubow to have a chance to profit from them. Gannett shares rose 2 cents on Wednesday to $2.46.
In December, Gannett gave Dubow 100,000 shares of restricted stock valued at $132,000.
The company estimated that restricted stock that Dubow received in previous years has plummeted by about $3.5 million, or 87 percent. Dubow hasn't been able to sell his restricted stock because of Gannett's rules requiring its executives to own significant stakes in the company.
Dubow's 2008 compensation package was rounded out by $144,002 to pay for his life insurance, company car, personal use of corporate aircraft, lunches and home security.