The company is $1.2 billion in debt, according to the report, and its shares were selling for 16 cents as of Feb. 25.
So naturally, the company's top executives received bonuses that were even more than their contracts called for.
CEO Michael Reed had a pay package of $1,250,000 in 2010, receiving a bigger bonus than his base salary. His bonus amounted to $750,000 of the total, according to the report. Apparently, the board of directors were quite pleased with Reed's performance since his contract calls for a target bonus of $200,000 and he received nearly four times that amount. Fortunately for Reed, he did not receive his bonus in GateHouse Media shares. The proxy statement spells out the company's deal with Reed:
Pursuant to his employment agreement, which has an initial three-year term that automatically renews subject to the same terms and conditions for additional one-year terms unless either we or Mr. Reed gives notice of non-renewal within ninety days prior to the end of the term, Mr. Reed receives an annual base salary of $500,000. Mr. Reed also is eligible for an annual, performance-based bonus. The agreement provides that Mr. Reed is eligible to receive an annual target bonus of $200,000 upon the achievement of certain performance goals agreed to by Mr. Reed and our Board. The bonus is payable in either our common stock or cash in the discretion of the Board, provided that no more than 50% of the bonus shall be payable in our common stock without Mr. Reed’s approval.
Reed was not the only GateHouse official to make out like a bandit, according to the proxy statement. Melinda Janik, chief financial officer, received $435,000, including a $160,000 bonus, and Kirk Davis, chief operating officer, received $740,339, including a $275,000 bonus.
The sizable pay packages of two other GateHouse officials, reported in the March 29 Turner Report, were not included in the proxy statement. General counsel Polly Sack picked up $140,000, and Mark Maring, treasurer, received $80,000.
The top five Gatehouse officials were awarded $1,415,000.
What accomplishments could have convinced the board of directors to award such generous bonuses. The report to stockholders, also filed today with the SEC, spells it out.
Revenues were down 4.5 percent, with advertising revenue down 3.4 percent. Thankfully, all of those cuts they made kept expenses down.
If Mike Reed and his group ever make a profit, it is hard even to fathom the kind of bonuses they will make.