By: Lucia Moses
Along with his $1.6 million salary, Douglas H. McCorkindale, Gannett Co. Inc.’s chairman, CEO, and president, received a $1.85 million bonus last year, reflecting the company’s strong performance in bad times. And Belo paid one of its executives, Jim Moroney, a relatively modest $11,200 bonus to reward him for results at Belo Interactive Inc., which he led for the first half of 2001.
But they were exceptions to the rule among top executives at publicly traded newspaper companies. Many received no bonuses as a result of missed financial goals, proxies show. “That’s the downside of pay-for-performance,” said Marshall Scott, principal at the newly renamed Mercer Human Resource Consulting, referring to the growing practice of tying pay to performance. “There can be a day of reckoning.”
Although their missing bonuses can amount to more than half of their base salaries, CEOs did not finish the year empty-handed. Many of them were enriched by base salary increases, larger option grants, and, in some cases, exercise of stock options.
Tribune Co. Chairman and CEO John W. Madigan, not only received $977,130 in salary, a 15.4% increase over 2000, but also 400,000 options, 140,000 more than in 2000. E.W. Scripps Co. CEO and President Kenneth W. Lowe received no bonus, but his salary rose 27%, to $800,000.
And Knight Ridder reset prices for Knight Ridder Digital options that were underwater as a result of the dot-com crash, allowing optionholders to exchange their options for new ones at fair market value.
All in all, however, newspaper companies are making sacrifices at previously unseen levels. Gannett decided not to increase base salaries this year for 77 of its top executives, while Tribune and Belo have said they would cut senior executives’ pay by 5% in 2002.
Although newspapers still lag other industries in the shift to noncash incentives as a percentage of pay, newspaper executives’ total pay has grown increasingly linked to annual and long-term incentives, said Allen Jackson, principal with Towers Perrin. According to the firm’s Media Industry Compensation Survey, base salaries have risen at a rate of 3% to 5% annually over the past 20 years, while bonuses have increased at a rate of 5% to 15% and long-term compensation has grown at a rate of 10% to 25%.