Newspaper Giant Gannett Gives CEO $32 Million in Severance After Laying Off Thousands of Employees
The news that troubled newspaper giant Gannett gave its CEO Craig Dubow a $32 million severance package probably won't cause a stir in many quarters, even though the company's board was far more generous to Dubow than to thousands of laid-off, furloughed, and salary-frozen regular employees over the past five years. Dubow's departure was due to health concerns, according to the Wall Street Journal. His hefty severance was determined by a 2007 contract agreement.
Gannett's plummeting circulation numbers and cratering ad revenue provide little inspiration for stockholders, and offer little means by which subscribers or stockholders could apply leverage on board members to make anything remotely approaching a solid business decision. Gracia Martore, the company's COO and former CFO, will assume Dubow's role, and appears to be showing at least some restraint so far. ABC News reported that in 2010, Ms. Martore took a pay cut from $950,000 to $900,000, and has nearly 30 years of experience with the company.
Dubow instituted deep, aggressive cuts at Gannett, keeping the company nominally solvent as ad revenues dropped from over $5 billion in 2005 to $2.5 billion in 2011. Gannett's stock prices fell from $72.69 to $10.45 during Dubow's tenure as well.
The situation raises the question: Who would go to work for a major news corporation when it is run in this manner? Most journalists don't expect to become multi-millionaires when they graduate from college or journalism school. But with Gannett's track record in recent years, it's hard to imagine how the company could attract employees who can type, much less conduct investigative journalism. PayScale, which derives salary information from employee reports, shows the pathetic range Gannett pays its editorial and creative employees. The usual "the company is responsible to its stockholders argument" is invalid in this case, because stockholders have experienced an 86% drop in their investment value over the past seven years of Dubow's leadership.
Dubow may be a very nice guy, and it looks as though his replacement, Martore, has some degree of leadership awareness, taking a pay cut and not flaunting her stock options in the face of demoralized employees and miserable shareholders. This news is a textbook answer to the questions of "What's wrong with corporate America" and "Why is journalism in such a bad state?"
There was no chance I would have stayed with Gannett corporation back in the 1980s when I worked for them as a college/summer job. Pay, treatment, and benefits were poor at that time. Now? Reporters would do better to start their own websites and receive and share Google ad revenue. At least then, some guy won't be able to loot the company while they are laid off by the thousands.
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