Bonuses To New York Times Execs Under Fire
At a time when New York Times managers are forcing all employees to take a five percent pay cut, and demanding even larger sacrifices from the NYT-owned Boston Globe, top executives of the beleaguered newspaper received substantial bonus and fringe benefit payments over and above their salaries, according to a proxy statement released on March 11.
These bonuses and benefits to top Times company executives have provoked growing resentment among Times staffers, and frank anger from Globe reporters who have been warned by Times executives that their paper will be folded if they do not come up with $20 million in pay cuts and layoffs.
On Tuesday, the Times disclosed a $74 million first quarter loss, 221 times larger than the $335,000 loss in the first quarter of 2008.
According to the New York Times proxy statement filed with the Securities and Exchange Commission, corporate president and CEO Janet L. Robinson received a total compensation package valued at $5.58 million in 2008, up well over a million from the $4.14 million she received in 2007, and the $4.4 million she received in 2006.
Robinson's $1 million base salary has remained the same for three years. In 2008, Robinson's total compensation included, in addition to her base salary: $1.6 million in stock awards, $1.5 million in options, a $35,000 bonus, $562,500 from the non-equity incentive plan, $898,171 from the "Change in Pension Value and Non-qualified Deferred Compensation Earnings," and "other compensation" of $46,368.
A number of NYT staffers contacted said that there was considerably more resentment voiced on the newsroom floor, and in newspaper guild meetings, about Robinson's pay than about compensation awarded to Arthur Sulzberger Jr., the NYT board chairman and publisher.
Staffers noted that even though Sulzberger received bonuses and other compensation more than doubling to $2.4 million his base salary of $1,087,000, his total compensation package has declined substantially over the past three years from $3.4 million in 2007 and $4.4 million in 2006. In addition to his 2008 base salary, Sulzberger's total compensation included a bonus of $38,045, stock awards of $54,443, option awards of $29,832, a non-equity compensation plan distribution of $597,850, a change in pension plan valuation and non-qualified deferred compensation worth $559,826, and $48,878 in "other compensation," according to the proxy.
One NY Times reporter described the empathy for Sulzberger and the antipathy toward Robinson as follows: "Arthur [and his family] own the paper, but no one expects him to be a businessman. Janet was hired to be the CEO, she should know [how to run the business]."
More importantly, according to sources, many reporters and editors are grateful to Sulzberger for refusing to impose massive layoffs and buyouts as many other newspapers have done. On Monday, when the Times newsroom celebrated winning five Pulitzer prizes, many of the speakers went out of their way to voice their support for Sulzberger. "It was surprising, and, I have to say, it was moving," said another reporter who was there.
Executive bonuses and other enhanced compensation are not sitting well at the Boston Globe, where employees have been told they must come up with $20 million annual savings, in effect cannibalizing the once-proud newspaper.
"What are they [Times executives] being rewarded for? It's just impossible to justify this kind of money going out of the door when the corporation is losing so much money," said Globe reporter Brian Mooney. "I speak for a lot of people who are just amazed at the depth and breadth of the hypocrisy here -- the liberal New York Times and the liberal Globe... at one point in the negotiations, the company proposed eliminating all sick days for Guild members, like an Alabama sweat shop."
Asked if the bonuses and extra executive compensation were appropriate at a time when employees are being forced to absorb salary cuts and joblessness, Catherine J. Mathis, NYT Senior Vice President for Corporate Communications, told the Huffington Post:
"With regard to shared sacrifice, please remember that for 2008, non-equity incentive compensation (which many think of as bonuses) for these folks was roughly half of what it was the year before and stock awards were down more than 80 percent in value. All of the Company's stock options are under water and there hasn't been a payout on the long-term incentive plan in years.
"[Sulzberger] declined to take restricted stock units and stock options in 2006, 2007 and 2008. As a result, [his] total compensation was less in 2008 than it was in 2006. In 2006 Arthur also asked that the Board limit his annual bonus to no more than his annual bonus for 2005. Most of the officers listed had not had a salary increase in three years. And while some received a bonus in lieu of salary one year, the 5% salary decrease that we announced affected all of them and more than offset any bonus in lieu of salary. All of our employees, from the top of the house on down, are feeling the pain of lower compensation."
Mathis cautioned that the total compensation numbers in the proxy report...
"...include the value of the compensation -- not the amount of cash they received. For example, they were all granted options. But those options are of value only in the stock price increases over the exercise price. The options vest over a four-year period and expire after ten years. For proxy purposes a value is assigned to the options even though the executives received no cash at the time they were granted. Similarly the change in pension value and non-equity incentive plan compensation is an assigned value, not cash the executives received."
A difficult-to-understand decision by the compensation committee, as reported in the March 11 proxy statement, was rating executive performance at "100 percent." According to the proxy:
"The Committee ties a substantial portion of each named executive officer's total potential compensation to individual performance. All executive officers, including the named executive officers, are eligible for annual cash bonuses and long-term performance cash awards that reinforce the relationship between pay and performance by linking compensation to the achievement of important short- and long-term financial, strategic, operating and individual performance targets set by the Committee in performance targets set by the Committee in the operating budget."
Asked to explain this, Mathis said. "The overall rating for executives is based on a broad set of enterprise goals, some financial and some nonfinancial. The rating applies [to] several components of our pay, including merit, bonus and stock grants. The bonus is based 75% on profit performance, only 25% on individual performance to which the rating would apply."
Mathis noted that "options are a forward looking component to our pay structure. They only have value if the stock price goes up, therefore they are based on future performance. The executive only benefits if the stock price goes up in the future due to good performance."
Last year, from January 2, 2007, to January 2, 2008, NYT stock fell by over 50 percent, from $17.45 to $7.59.
The paper's 2008 revenues, $2.95 billion, were down 7.7 percent from $3.20 billion in 2007. After reporting net income of $208.7 million in 2007, the company declared a net loss of $57.8 million in 2008.
For Sulzberger, who became NYT publisher in 1992, the circulation figures since he took over are depressing. If trends continue, weekday circulation will fall below 1 million this year.
On March 26, the New York Times announced a nine-month, across-the-board, five percent pay cut for everyone, along with 10 days of leave. Sulzberger and Robinson wrote to the staff: "The environment we are in is the toughest we have seen in our years in business."
At a staff meeting, Executive Editor Bill Keller warned that unless the Newspaper Guild agreed to the 5 percent cut, "we will face layoffs, probably on the order of 60 to 70 people." There are just under 1,300 people on the news staff.
On April 3, the Boston Globe reported that NYT officials had informed leaders of the unions representing workers at the Globe that unless they agreed to $20 million in savings through pay cuts, layoffs, and reduced pension fund contributions, the Times would shut the Boston paper down.