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What Price Brains?

Pulitzer Inc., the St. Louis-based owner of the Arizona Daily Star, has assembled a really spiffy (though some might consider it gauche) silver-harness and golden-parachute combo for its top officers and managers. It's a $10.2 million incentive package to keep company honchos from bailing out as Pulitzer weighs its future, and a reward for surviving the transition if a change in company control occurs.

About $4 million is earmarked for the company's seven top officers, and the remaining $6.2 million would be awarded to unnamed members of management who are not officers. That group would include Star publisher Jane Amari, who is also Pulitzer's vice president for news, and probably Bobbie Jo Buel, the Star's executive editor.

The offers, tendered Dec. 22, were announced Dec. 29 in a Form 8-K filing with the Securities and Exchange Commission.

The deal involves two bonuses--a "transaction participation bonus" to the key officers and managers still on the payroll on the date a change in control occurs, and a retention bonus to be paid if the officer is still employed by the successor company three months later. The retention bonus would also be paid if employment were terminated by the company "without cause" or by the officer himself "for good reason."

The big winner could be Senior Vice President Terrence C.Z. Egger, a former vice president for advertising at Tucson Newspapers Inc. Egger left Tucson in 1996 to become general manager of the St. Louis Post-Dispatch--a noteworthy move in that TNI execs seem to frequently travel among Gannett, not Pulitzer, properties. If Egger qualifies for both bonuses, he pockets $918,675. Alan Silverglat, senior vice president for finance, is looking at combined bonuses of $911,418, while president and CEO Robert C. Woodworth has been offered $795,593.

This is on top of an executive transition package adopted in September 2001 that would pay Egger and Silverglat each 1.5 times their combined salaries and bonuses, while Woodworth would get triple his combined salary and bonus.

According to Pulitzer's 2004 proxy statement, Woodworth's compensation--including salary, bonus and stock dividends--was $1.4 million. Egger's salary, bonus and dividends totaled $617,539, and Silverglat's salary and bonus (no dividends) totaled $607,817.

The plan also accelerates vesting of their stock options and restricted stock awards.

One wonders if some sort of incentive/severance package will be offered to folks who do the real work of putting Pulitzer's newspapers on the streets every day--the reporters, photographers and editors. That's a big issue in Tucson, if Gannett, owner of the Tucson Citizen, buys out Pulitzer. Given the configuration of the companies--Star Publishing Co., Citizen Publishing Co. and Tucson's Newspapers--it's likely that the reductions in force resulting from the deal would fall mathematically short of the federal laws designed to protect workers in large-scale layoffs.


NOT THE BEST TIMING

In the abovementioned 8-K notice, Pulitzer announced it was taking yet another step in cleaning up loose ends as a prelude to a change in control. The company terminated its deferred compensation plan Dec. 27, and paid out to its participants Dec. 31.

It's unclear from Pulitzer proxy statements how many people participate in the plan, but one of them is president/CEO Robert C. Woodworth. Pulitzer proxy statements indicated that he would have cashed out last week at nearly $2 million, before withholding.

For the uninitiated, deferred compensation plans are a sometimes-mandatory, sometimes-voluntary deal that enables the company to pay its executives their contracted salaries, but only up to the $1 million per executive deduction the Internal Revenue Service allows corporations.


CLARIFYING CLEAR CHANNEL

Nobody asked, but here's a little more on Clear Channel's status regarding ownership of Willcox FM station KWCX. Technically, it may not be a contingency sale, but it sure smells like one.

In April 2003, the Federal Communications Commission approved the $2.5 million transfer, but the sale agreement on file with the FCC shows that Clear Channel put $1.25 million down and has up to five years to consummate the acquisition. The owner, Chicago-based Lakeshore Media, was presumably carrying Clear Channel's water when it tried to convince the FCC to reallocate the Willcox station's frequency (104.9 MHz) to Davis-Monthan Air Force Base instead of allocating it to Sells.

And what's all this about a Davis-Monthan radio station, anyway? Some years ago, the FCC decided to create more station opportunities in markets by authorizing frequency allocations to outlying communities and defined census areas. Davis-Monthan was considered an outlying census area until Tucson annexed it in 1986; the Census Bureau took it off the list. In assigning the frequency to Sells, the FCC left unanswered the question of whether D-M could be a community to which a radio frequency could be assigned.

What's big about that situation is that Clear Channel is virtually maxed out on station holdings in Tucson, and assigning a frequency to the D-M community would have let them skirt the rules. The radio giant has done similar things in other areas. For example, in San Diego, the company has maxed out its ownership, but controls two other radio stations through management agreements with the owners.

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