Among the needed pay reforms are rules to tie executive payouts to long-term results, like prohibitions against cashing out equity-based compensation until many years after options or shares have vested. Bonuses need to be delayed to ensure that the profits on which they are based do not prove transitory. An insightful reform recommended by Lucian Bebchuk, a Harvard Law professor and director of the law school’s Program on Corporate Governance, would require that executive compensation be tied not only to the company’s stock performance, but also to the long-term value of the firm’s other securities, like bonds. That would encourage executives to be more conservative about using borrowed money to juice returns to capital, because it would expose them to the losses that leverage can exert on all the firm’s investors.New York Times internal memo from Times Chairman Arthur Sulzberger Jr and CEO Janet Robinson to employees, distributed March 26, 2009:
As you know, the global economic crisis is taking its toll on a broad range of businesses and sectors, here in the U.S. and around the world. We have reported in our own newspapers and on our own Web sites that the economy is likely to continue struggling throughout this year and possibly longer.Dow-Jones news service article, March 12, 2010:
Given this economic outlook and the changes occurring in the media business, we, regrettably, must take even more steps to lower costs. We have been, and continue to, reorganize and reduce our staff, which means we are saying goodbye to many of our close colleagues. Now, in addition, we are lowering salaries through the end of this year for all remaining nonunion employees and, in exchange, providing additional time off. We plan to approach the Newspaper Guild in New York to ask for its participation in the program and to continue working with our unions in Boston and our other locations on lowering our costs, including wage reductions.
The salaries of all employees at The New York Times Media Group (with the exception of the IHT, which is working on other cost reduction measures), The Boston Globe, Boston.com and Corporate in New York will be rolled back by 5%, starting this April, and these employees will receive 10 additional days off to use before the end of the year.
New York Times Co. Chairman Arthur Sulzberger Jr. and President and Chief Executive Janet L. Robinson received big increases in their 2009 compensation despite weakness in advertising markets and broader worries about the future of print media.(via Wolf Howling via Future of Capitalism)
The media company did have a relatively upbeat fourth quarter, as earnings more than tripled on one-time gains and advertising spending picked up for its newspapers, Web sites and other platforms.
Sulzberger's overall pay more than doubled to $6 million in 2009 as nonequity incentive-plan compensation quadrupled to $2.4 million. The change in pension value and nonqualified deferred-compensation earnings climbed to $1.2 million from $559,826. Robinson's overall compensation rose 32% to $6.3 million, and similarly sharp increases in those two pay categories were partially offset by $1.1 million less in stock awards.
Shares of New York Times were recently down 0.3% at $11.49. The stock has nearly tripled over the past year.