GateHouse bonuses give clue they don’t have one
(A correction has been added to this story)
The problem with being a publicly traded company is all your missteps are there for everyone to see. The problem with being a publicly traded company that gives bonuses and enhanced severance packages to top executives is it’s there for everyone to see.
The problem with being a publicly traded company that does all that while trading at 5 cents a share, admitting they are close to bankruptcy, and laying off hundreds of employees is it angers all your past and present employees, especially those recently laid off with little more than a couple weeks severance.
So it goes for GateHouse Media, the newspaper giant that sprung from nothing to more than 500 daily and weekly papers, including the Patriot Ledger, the Brockton Enterprise, and more than 100 others in Massachusetts. In its annual filing with the Securities and Exchange Commission, the company acknowledged $1.4 million handed out in bonuses to their top executives while reporting a nearly $10 million drop in operating income as well as an 8.6 percent decline in advertising revenue.
In a press release, GateHouse put the best spin on the numbers but failed to mention the bonuses or severance package.
All this comes as GateHouse is revamping its operations by consolidating its copy editing desks at two locations for all the 500 national papers. The Rockford, Illinois, newspaper will house copy editing for publications with a circulation of 5,000 or more while the Framingham office of the Metrowest Daily News will handle copy editing for those papers with circulation under 5,000 copies. GateHouse is touting the new centers will employ 70 people but they’re not saying out loud the move will cut 300 jobs around the country
, including at the Ledger and Enterprise, two of the company’s bigger outlets. (A GateHouse editor says the Ledger and Enterprise are not included in the “central desks.”)
Some of the problems were presaged in a 2008 CommonWealth piece by media observer Dan Kennedy about GateHouse and the perils of media companies in general.
The annual report shows the company, which Reed started with little capital and a whole bunch of loans, has $4.6 million due to creditors this year but in 2014, a whopping $1.2 billion balloon payment is due, and the company admits it doesn’t have the cash or the cachet to refinance.
“If we are unable to repay our indebtedness at maturity we may be forced to liquidate or reorganize our operations and business under the federal bankruptcy laws,” the report states.
But if they do declare bankruptcy and Reed, who received an $800,000 bonus for last year, and Davis, who got a $350,000 bonus, are forced out, they just guaranteed themselves a soft landing with the severance deals. That is what is irking those who left and scares those who stayed behind.
One former staffer on Facebook, noting the company’s performance on Wall Street, summed up the feeling succinctly: “They should have paid them in stock options.”
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