Posted on 03/09/2006 8:32:37 AM PST by Grampa Dave
Motley Fool A Dubious Sign of the Times Tuesday March 7, 3:17 pm ET By Tim Beyers
I've long wanted to own stock in New York Times (NYSE: NYT - News) for several reasons. I love the paper. I'm a big fan of About.com. And then there's sentimental angle: I'm a New York native.
But there's one big reason why I'm not buying the stock. A check of the proxy statement filed with the Securities and Exchange Commission (SEC) on Friday reveals that chairman Arthur Sulzberger Jr. and CEO Janet Robinson both received hefty bonuses despite meeting less than 60% of the company's earnings target for 2005.
Mr. Sulzberger received $1.6 million in total compensation last year. Ms. Robinson received $1.4 million. More than one-third of each of those totals was paid out in bonus cash. Page 28 of the proxy explains (emphasis mine):
We set a target amount of $950,036 for Mr. Sulzberger Jr. and $810,000 for Ms. Robinson. Earnings per share in 2005 resulted in achievement of 59% of the target amount, and, as a result, an annual bonus payment of $560,521 was made to Mr. Sulzberger, Jr. and an annual bonus payment of $477,900 was made to Ms. Robinson. The annual bonuses paid to Mr. Sulzberger, Jr. and Ms. Robinson in 2005 were based solely on 2005 earnings per share targets; no component was discretionary.
I've no doubt that both Mr. Sulzberger and Ms. Robinson deserve to be well-compensated for their jobs. Neither has a comfy perch. But this bonus arrangement is, well, bogus. If you're going to set a target, meet it -- or don't. But don't expect a bonus for failure.
I'd love to just leave it there, but I can't, because pegging bonuses to per-share earnings targets is silly at best and dangerous at worst. GAAP accounting is too easily manipulated over short periods, even a full fiscal year. New York Times' method might not only be deficient in measuring ongoing contributions to shareholder value (because of one-time gains, charges, and associated oscillations). It could also theoretically invite ugly conflicts of interest, tempting executives to massage the numbers solely to fatten their bonuses.
The failure of such a compensation structure to meet best practices ought to be obvious, especially to managers of a business that is competing against tough rivals in a very difficult market. Apparently, it isn't. Good luck changing that, too: According to the proxy, descendants of Adolph Ochs, who bought the newspaper in 1896, retain the right to elect 70% of the board of directors.
Mr. Sulzberger is Adolph Ochs' grandson, and he doesn't have to listen to you, the common shareholders, if he doesn't want to. That means this story might not make a lick of difference, which would be too bad. I think the bonus program needs reforming. Shareholders, and the reporters who have been on the losing end of job cuts in recent years, deserve nothing less.
Fool contributor Tim Beyers is an avid reader of The Denver Post. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.
"I'd love to just leave it there, but I can't, because pegging bonuses to per-share earnings targets is silly at best and dangerous at worst. GAAP accounting is too easily manipulated over short periods, even a full fiscal year. New York Times' method might not only be deficient in measuring ongoing contributions to shareholder value (because of one-time gains, charges, and associated oscillations). It could also theoretically invite ugly conflicts of interest, tempting executives to massage the numbers solely to fatten their bonuses."
"A check of the proxy statement filed with the Securities and Exchange Commission (SEC) on Friday reveals that chairman Arthur Sulzberger Jr. and CEO Janet Robinson both received hefty bonuses despite meeting less than 60% of the company's earnings target for 2005."
Just a little Enronning here to give Sulzie and Robinson, very large and unearned bonuses.
The marketplace will eventually fix all this. It takes a while sometimes, but you can't fool the marketplace forever. Interesting that Tim Beyers almost makes one of the most basic mistakes of investing - falling in love with your investment.
Hah.......maybe shareholders and the NYT newsroom were surprised, but not FR regulars.
Well, shoot! The old man should have set up a Tax Free Foundation, Like POYNTER of The St. Pete Times, and be able to 'disallow' ALL criticism forever--carrying on 'training for insiders' thru its 'educational' facet....NONE can complain, unless they are 'insiders' and the foundation gets richer, tax free, and any incidental 'crossover' of the employees at the paper and the foundation is just accidental..Right?
I get the feeling that Tim is liberal. I learned a long time ago to never trust any liberal's advice on financial moves.
However, to his credit, he has whacked the NY Slimes fairly hard.
Actually, I would bet that most Freepers who own mutual funds, have at least one mutual fund which owns a chunk of NYT stock, TRB stock or WPO stock.
If they are interested they can go to the site below to check out which institutions and mutual funds own NYT, TRB, and or WPO stock.
The link below will take anyone to the MS Money site re institutional ownership of a stock. Once there just enter, NYT, TRB and/or WPO in the symbol spot. Once at the individual stock site, then click the ownership icons.
http://moneycentral.msn.com/investor/invsub/ownership/ownership.asp?Symbol=
Once there, any Freeper can enter NYT, WPO or TRB to see which mutual funds and institutions own these losers. I was surprised to see an increase in ownership by most funds versus their last ownership reports.
"Well, shoot! The old man should have set up a Tax Free Foundation, Like POYNTER of The St. Pete Times, and be able to 'disallow' ALL criticism forever--carrying on 'training for insiders' thru its 'educational' facet....NONE can complain, unless they are 'insiders' and the foundation gets richer, tax free, and any incidental 'crossover' of the employees at the paper and the foundation is just accidental..Right?"
Now, I'm really mad. Your example above involves two of the worse enemies Americans have:
1. The elite owners of the MSM.
2. The fraudulent NGO non profits/tax free foundations.
Good Post.
The grandson is really killing his granfather's business.
The stock price should drop even more...when this news is better known.
Thanks for posting these two wonderful chart of the NYSlimes stock value.
As per my tagline, when I see these charts, I experience and enjoy boundless and shameless Schadenfreude.
All the news that's 'Pinched' to fit BUMP
The Times' 1996 endorsement of bill clinton1 was the problem. The endorsement, you may recall, was contingent on clinton getting a brain transplant--specifically of the character lobe.2 How could The Times square that shameful, irresponsible endorsement with this monstrous failure3?
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December 7, 1941+64 The context of our concern today--regardless of political affiliation--is Iraq and The War on Terror, but the larger fear is that our democracy may not survive. We have the requisite machines, power and know-how to defeat the enemy in Iraq and elsewhere, but do we have the will? In particular, do we have the will to identify and defeat the enemy in our midst? Answerable to no one, heir apparent in her own mind, self-serving in the extreme, Hillary Clinton incarnates this insidious new threat to our survival. What we decide to do about Missus Clinton will tell us much about what awaits us in these perilous new times. COMPLETE LETTER
AN OPEN LETTER TO TIM ROBBINS, DAVID GEFFEN, CHRIS MATTHEWS, MAUREEN DOWD + JEANINE PIRRORE: a not-so-modest proposal concerning hillary clinton
Dear Concerned Americans,
Hillary Clinton's revisionist tome notwithstanding, 'living history' begets a certain symmetry. It is in that light that I make this not-so-modest proposal on this day, exactly 64 years after the attack on Pearl Harbor.
December 7, 1941+64
Mia T
AN OPEN LETTER TO TIM ROBBINS, DAVID GEFFEN, CHRIS MATTHEWS, MAUREEN DOWD + JEANINE PIRRO
RE: a not-so-modest proposal concerning hillary clinton
COPYRIGHT MIA T 2006
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