DALLAS – A.H. Belo Corp. (NYSE: AHC), parent of The Providence Journal Co. and other daily and weekly publications, announced plans to trim executive severance plans, reduce pay for most workers and suspend contributions to a “pension transition” plan.
The news came in a “Letter to Colleagues” from A.H. Belo Chairman, President and CEO Robert W. Decherd. “Since I last communicated with you in late January,” he wrote, “the challenges A.H. Belo and our industry are facing have intensified – reflecting one of the most trying advertising environments our industry has ever encountered. … Identifying additional opportunities to manage cash remains our first priority, and we are making salary changes similar to those recently announced by many of our peer newspaper companies.
“On Tuesday, the board of directors approved my recommendation to reduce my base salary by 20 percent and the base salaries of other Management Committee members by 15 percent, effective immediately,” Decherd said.
“In addition, all full-time employees making more than $25,000 per year will have reductions in base salary,” starting “in the payroll cycles on or near May 1.’ Those cuts start at 2.5 percent for workers making $25,000 to $74,999 per year. They rise – in 2.5-percentage-point increments – to 10 percent for those making $150,000 to $225,000, and 15 percent for those making more than $225,000 per year.
But severance pay for workers who receive layoff notices by June 30 will be calculated based on their salary level before the cuts. And, “to cushion the impact of the wage cuts, all impacted employees will receive three additional personal days per calendar year, effective at the time of the salary reductions,” the CEO said.
Altogether, the pay cuts are expected to save the company more than $10 million per year, Decherd said, adding that “we will ask employees who are covered by collective-bargaining agreements to voluntarily lower their salaries by the levels described above.”
The company intends to save another $6 million by suspending its contributions to the Pension Transition Supplement Plan (PTS) for participants in the G.B. Dealey Retirement Pension Plan. “The company intends to fund the contribution for 2008 no later than Oct. 15,” Decherd wrote, but “the funding for the calendar year 2009 contribution that would normally be made in 2010 will not be made.”
Meanwhile, A.H. Belo said today, the company’s plan to suspend matching contributions to its savings plan – announced by Decherd in his last letter, on Jan. 30 (READ MORE) – was approved by its board of directors at that same meeting. The board also approved an amendment to the existing Change in Control Severance Plan for some executives, including Decherd, reducing the multiple used to calculate payouts.
The new austerity measures come as A.H. Belo and other publishers struggle to cope with rising costs and declining advertising revenue amid the current recession.
A pay freeze for non-union workers was announced in October (READ MORE), after A.H. Belo pared 500 workers companywide. Since then, the company has renegotiated its line of credit; announced plans to sell a number of parcels, including the Journal’s Providence headquarters; and cut another 500 workers, 100 of them from The Providence Journal. (READ MORE)
“These decisions are not taken lightly, and all are made with a focus toward maintaining A. H. Belo’s ability to be the leading provider of local news, information and advertising in the markets it serves,” Decherd wrote today.
Still, he said, “we have made significant progress implementing the cost-reduction initiatives I described in my Jan. 30 letter, and the companywide reduction in force is nearing completion.”
“Our hope is to restore most or all of these cuts for impacted employees at some time in the future, as business conditions permit. … As conditions improve – which they inevitably will – we expect to look back at these steps as being painful but necessary for [the company’s] long-term prosperity.”
A.H. Belo Corp. (NYSE: AHC) owns and operates The Providence Journal, The Dallas Morning News, The Denton Record-Chronicle and The Press-Enterprise of Riverside, Calif., and as well as a variety of specialty publications for the youth and Hispanic markets; the Web sites associated with its publications; and direct-mail and commercial printing businesses. For more information, visit www.AHBelo.com.
