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GCI: Greedy company, indeed
Newspaper giant Gannett Co. Inc. announced today that it's laying off 700 people, or roughly 2 percent of the company's workforce.
This just three months after the company revealed CEO Craig Durbrow had his salary doubled and received a $1.25 million cash bonus.
Good lord.
This just three months after the company revealed CEO Craig Durbrow had his salary doubled and received a $1.25 million cash bonus.
Good lord.
posted by Jeremy Schiffres, City Editor at
3:28 PM
5 Comments:
just sad. nothing more to say..
First, your premise that a company is "greedy" based on how it compensates an employee -- even a CEO -- does not bear up under scrutiny. For instance, from Craig Durbrow's perspective Gannett has been generous to him. From Gannett's perspective they obviously value Durbrow for his ability and performance. These are tough times in the newspaper industry, and Gannett must feel that Durbrow has done things to keep the newspaper chain going.
Second, even if one accepts the challenge of your premise, that a company ought not lay off 2% of its workforce while doubling the compensation of its CEO, there are not enough fact on the table for you to prove that this amounted to a questionable decision. Perhaps Durbrow was able to keep layoffs from being two or three times that many. Perhaps he used innovative means to drive individual Gannett papers out of the red and into the black. That could be one of the reasons he's been rewarded: For the jobs he was able to save by finding productive avenues for Gannett's human capital.
Look at it in simpler terms, Martin: If all the money thrown at Dubrow since March had gone instead to the company's general employment costs, most of this week's job cuts could have been avoided, and hundreds of people would not be left in financial straits while the CEO lives even higher on the hog.
From purely a business perspective, your argument may be sound, but good luck selling it to the 700 folks at Gannett who lost their jobs this week.
The cost of employing 700 people, salary plus benefits plus FICA contributions, etc., would come to at least $60 thousand a head, minimum, I would guess. That's $42 million annually. It probably comes to much more than that.
Also, jobs are not charitable institutions. Yes, in a downturn, when sales are not good, it does not mean that you necessarily want to lose productive workers and so you try to carry them. But that is the bottom line on any job: What does that job and the worker in it produce?
So, by eliminating non-productive jobs, Durbrow might well have helped other workers hold onto their jobs by keeping the company profitable.
I'm unfortunately old enough to remember when New York City had seven or eight major daily newspapers, including the Herald-Tribune and the Journal-American and The Mirror. The newspaper unions had a lock on those papers. There was a huge strike. The papers could never recover. And thousands were out of jobs. It was also arguably one of the most severe blows ever to the culture of the Big City.
It's possible that Durbrow really does not deserve to be compensated the way he is, but it's far more likely that he did things to keep
Gannett in the game. In any case, it's up to the board of directors, representing ownership, to make that call. It's probably the case that Durbrow's performance marked him as one of the top CEOs in the business, and that would naturally drive his value up. Maybe the New York Times Company or the Washington Post or Wall Street Journal made him an offer that Gannett had to match, or lose him.
Two percent of the workforce being laid off is seven percentage points below the national unemployment rate, assuming that this was Gannett's first round of layoffs since the recession began.
(And that's in the newspaper industry. Consider the homebuilding industry, which has been struck by catastrophe. I would hate to think what the total unemployment is there. It's probably not even measureable since there are so many different contractors involved.)
I am not saying, howver, that management and boards are all-knowing and all-wise. They make lots of mistakes. Some companies can afford to make serious mistakes, some cannot. Without looking, though, I would bet that Gannett is not known for throwing money at people willy-nilly, given the small profit margins in the newspaper business these days.
Martin: Gannett has had several rounds of layoffs in the past few years.
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