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When top Style editor Deborah Heard informed her underlings that she was taking the Washington Post’s 2008 early-retirement offer, she didn’t haul out some line about spending more time with her family. “The money was just too tempting,” wrote Heard in an electronic note on May 12.
Joseph Elbert, the former boss of the paper’s photography department, called the buyout an “incredible deal.” He’s taking it, too.
Heard, Elbert, and the roughly 100 other Post newsroom employees who are finding new lumps in their bank accounts can thank the ghost of Bill Ruane. The pension kitty that is going to be paying for the boat slips, wine cellars, and personal trainers of these retiring types owes its bottomlessness in large part to Ruane.
A founder of the Wall Street firm Ruane, Cunniff & Goldfarb, Ruane started assisting with the company’s pension assets in the 1970s, and his firm continues in that capacity today. (He died in 2005.) Ruane was a close friend of Warren Buffett, and his firm did for Post pensioners exactly what it did for investors in its famous Sequoia Fund—namely, stock up on Buffett’s Berkshire Hathaway stock. “A lot of it was invested in Berkshire Hathaway back when Berkshire Hathaway was a relatively unknown stock,” says Jay Morse, the Post Co.’s retiring CFO.
The rest is reducible to what you learned in Investing 101—under Ruane’s guidance, the Post Co.’s pension assets steadily compounded, to the point of self-sufficiency. It’s been decades since the company has had to make contributions to the fund. And in the last annual report, its assets hit $1.87 billion—a full billion greater than its obligations. Want a reference point for the Post’s pension depth? Try the New York Times, where the obligations of the company’s funds exceeded assets by $275 million at the end of 2007.
So how much does a buyout drain from the Post’s pension fund? The last round, in 2006, cost the company nearly $51 million—aka pocket change. In its currently bloated state, the fund could finance another round of newsroom early retirement incentivizing, plus some golden parachutes for a few well-placed administration sources and, hey, why not buy out the paper’s media critics too? For some reason, however, top editors have spread the word that senior Posties may never see another buyout sheet.
It must be that they want the veterans to take the money and run. And therein lies the genius of a good buyout: The retirement incentives come out of the pension fund and not the newsroom budget. Yet it’s the newsroom budget that gets pared down in the process.
Example: Don Podesta. After serving for three years as the paper’s chief copy editor, Podesta, 58, is assisting with a newsroomwide reorganization of editing functions, an initiative that’ll do away with Podesta’s position. Once he finishes his work, he’ll leave via the buyout. Off the books will go Podesta’s $167,000 salary.
For his part, Elbert, 61, relieves the payroll of his $185,000 salary and walks away with the following “incentives”: about $280,000 in a lump-sum payment, retirement benefits that kick in immediately and cover about 35 percent of his salary in his top-five consecutive earning years; 401(k) benefits; $4,000 a year until he reaches 65 (for health insurance); and another $4,000 in something called an “annual cash pension supplement,” or a cherry on top. “You know, I should be irresponsible—I should go on a spending spree,” says Elbert.
One line stuck out in a staffwide memo from Post Publisher Katharine Weymouth this spring. “While we expect to be able to achieve meaningful staff reductions through these [buyouts], I am sorry to say that we cannot rule out layoffs,” wrote Weymouth.
According to the 2007 annual report, the Post Co. tangles with five unions to define the working conditions of nearly 1,800 full- and part-timers at the company. The unions represent not only journalists but also commercial department employees, carpenters, engineers, photoengravers-platemakers, electricians, and so on.
Contracts negotiated by Post Co. unions have long included seniority clauses, which protect the people with the longest tenure and highest salaries. Management types everywhere hate these “last hired, first fired” provisions because they imperil the young eager beavers who represent the future of the enterprise. And work for cheap, too.
Post Co. negotiators are now going after those seniority provisions. Harry Geety is an assistant business manager with the International Union of Operating Engineers, which represents around 30 Post Co. employees. He says the union’s contract with the Post Co. expired in April, and he attributes the prolonged bargaining impasse to the company’s insistence on wiping out seniority protections. “We had a long-term employee on the [bargaining] committee,” says Geety. “He made a comment to me that this was the first time they’d gone after seniority.”
It’s the same across the company’s unionized payroll: The local electricians’ union is facing difficulties over seniority, and the machinists who work at the company’s printing facilities have already seen their seniority privileges eroded. In recent contract talks, company negotiators cleared the way for discretionary layoffs, provided that any such action is preceded by an early-retirement offer, according to Lonnie Vick, a business representative with the International Association of Machinists and Aerospace Workers, District Lodge 4, Local 193.
The Post, like any sane corporation, strives for uniformity in its various labor contracts, a dynamic with implications for its journalists. The newsroom’s union will begin negotiations with corporate this fall on a new three-year contract and is girding itself for a fight to save last-hired, first-fired policies. “It’s a question of fairness, and we’re going to protect that with everything we have,” says Rick Ehrmann, local representative with the Washington-Baltimore Newspaper Guild.
Your average rank-and-filer in the Post newsroom is no match for inflation. Under the current labor contract, for instance, a reporter making, say, $67,600 gets annual raises of just more than 1 percent. Vis-a-vis such parsimony, Joe Reporter’s best hope is to earn a merit raise from his superiors. But Joe should be advised against figuring any such boost into his long-term financial planning, because: 1) Merit raises require a lot of hard work or good luck; 2) Merit raises can be blocked by peevish bosses; and 3) Merit raises aren’t exactly handed out like Inauguration Day assignments. “The overwhelming majority of employees do not get a merit increase,” says Ehrmann. “They don’t take into consideration the needs of two-thirds of their employees.”
Well, at least it’s good to know that their bosses’ earning power outpaces the wretched economy. The Washington City Paper has obtained a chart outlining salaries for the Post’s assistant managing editors (AMEs) and other newsroom personnel at their earning level (pdf). The chart makes clear that annual raises for top editors average out close to 3 percent.
The largesse, however, doesn’t end there. There are bonuses, too, which help explain why your AME is so happy once a year. Those bonuses can be as high as 20 percent of an AME’s annual salary or even more, according to several sources.
2 or 3
Consider the greatest gig in all of journalism. Is it a columnist slot at the New York Times? A foreign correspondent for NPR? Political guy for ABC?
Here’s a plug for a post-AME job at the Washington Post.
The plan here is to put your time in as a top newsroom manager. Run Metro, or Style, or the foreign desk. After a decade or so, declare your need to get back to the basics of journalism.
You’ll be partaking in a gilded Post tradition of managers returning to their content-providing roots. Jo-Ann Armao, a former Metro AME, is now an editorial writer; before he took the buyout this year, photography head Elbert had returned to shooting photographs; Jill Drew ran the financial section and served as weekend gatekeeper before bolting to China as a foreign correspondent.
Although these folks generally give up their bonuses and raises, they keep their base salaries.
The paper’s generosity toward its elders— (according to the salary sheet, AMEs who run the prominent daily sections of the Post average $187,500 in annual base pay) makes life easier for top newsroom management, which periodically needs to replenish the AME ranks with new talent. Incumbent AMEs move out more readily when they aren’t facing the loss of a title and, say, a 50 percent pay cut. Says Armao: “It’s been to the Post’s credit that they make it easy to go back and forth between being editors and reporters—it makes for better all-around journalists. It’s good that people have not had to stay in jobs just because of salary.”
With advertising revenues and circulation headed south, however, adult supervision may have trouble holding down its line item on the company’s budget. The minimum salary for a reporter at the paper, after all, is just shy of $45,000, though new hires may get starting salaries north of that mark. Meaning: For what the paper is paying a former AME, it could hire at least two or three whippersnappers and finance a phenomenal party for all the buyout-takers.
Of the 19 top Post earners on the salary sheet, 13 are men. The two top dogs in the newsroom are men, too. So hiring more women to top jobs may be something to think about over there.
But are the women who have made it to senior management getting their fair share?
Tough call, in part because the roles of the listed managers are so disparate. Bob Woodward’s $10,300 salary, for example, represents a voluntary pay cut on his part, and totally skews the figures for male compensation.
The best point of comparison is the pay of male and female AMEs in charge of putting content into the paper every day—i.e., the heads of the photography and art departments, foreign, sports, Metro, national, Style, and financial. As it turns out, the men in this group earn on average about $3,000 more than the women. That number casts the Post as a far more hospitable place for women than the economy at large. According to the Bureau of Labor Statistics, women who work full-time make on average 81 percent of what their male counterparts earn.
The women managers in this AME grouping pull down 98 percent of what their male counterparts make.