Newspaper Execs Mull Stock Option Policy

By: Mark Fitzgerald Down in the newsrooms, two similar events may make a trend, but, in the executive suites, wary newspaper CEOs are biding their time before they commit to treating stock options as an expense.

"We're waiting to see what the trends suggest," Douglas H. McCorkindale, Gannett Co. Inc.'s chairman, CEO, and president said during a July 16 analyst conference call. "If the world changes so that we have to do it, that's fine with us, but I'd like to make sure the world does it on a comparable basis."

Gannett's reaction was typical. Among other companies taking a wait-and-see attitude is Media General Inc. "It's not a matter of 'You first' -- we think it's very important for the process to have a basis for everybody to follow so investors can have confidence in the numbers," Media General spokeswoman Lou Anne Nabhan said.

The Washington Post Co. prompted the discussion among newspapers when it disclosed July 15 that, like the Coca-Cola Co., it had decided to expense stock options on the advice of one of its directors, investor Warren E. Buffett.

So far, though, the only newspaper company following suit is Lee Enterprises Inc. Chairman and CEO Mary E. Junck said Lee will treat future employee stock-option grants as an expense. The financial impact looks to be small: Junck said if current outstanding stock options had been expensed last year, earnings per share would have dipped 4 cents, to $1.31.

The reluctance of newspaper companies to commit to the change is no surprise, said Nell Minow, an expert on corporate governance who founded the online research service The Corporate Library: "I would not expect [newspaper companies] to be first, second -- or 300th in line" to expense stock options.

Until relatively recently, Minow noted, most big newspaper companies had the "dual class" stock structure that continues at the New York Times Co., Washington Post Co. and Dow Jones & Co. Inc., where control of certain favored shares allows a family to dominate a public company. Said Minow, "The idea was that this insulated the paper from pressures that would otherwise turn everybody into The National Enquirer."