Paying more than necessary at Meredith…

September 2, 2010

The publishing world buzzed at Meredith Corporation’s (MDP) August 2 announcement that John H. (Jack) Griffin, Jr., the President of its National Media Group, was leaving four days later —to pursue another opportunity. News leaked — even before an official announcement was made — that Time Warner, Inc. (TWX) had tapped Griffin to become Time, Inc—s. CEO at the end of September and eventually become its Chairman, too.

On August 30, an Exhibit (Separation Agreement and Release) attached to Meredith’s 10-K disclosed that Griffin got about $1.4 million worth of payments and benefits on his way out the door; and it appears that Meredith was not contractually obligated to pay him most of that money. Of course, there’s always the chance that Griffin’s departure wasn’t voluntary – but from all outward appearances, he left to take a sweet gig at Time, Inc., not because the board was unhappy with him. And that makes the board’s largesse all the more puzzling.

Griffin’s Employment Agreement (executed March 9, 2008 and re-executed August 24, 2009) states that if Griffin voluntarily left the company before the contract expired on June 30, 2011

——in such event the Company’s only obligation to Griffin shall be to make Base Salary payments provided for in this Agreement through the date of such voluntary termination—. and (b) the Company shall have no further obligation to pay any bonuses to Griffin under the terms of the MIP or this Agreement.

Yet — addressing subsection (b) first — Meredith gave Griffin a lump sum payment for $1,256,301.00 on August 6 that is stated to be —in full and final satisfaction of his FY2010 MIP bonus.

Next, Griffin’s Separation Agreement clearly states that its effective date was August 6, 2010; thus, the company’s stated obligation (per his Employment Agreement) was to pay his base salary through the end of that week. But the Separation Agreement reveals that the company paid him $125,000 —in full and final satisfaction for any claims he had that related to his FY2011 compensation. Griffin’s base salary was $725,000 a year, which means that Meredith gave him more than two months— worth of extra pay.

In exchange for releasing —any and all claims under the Age Discrimination in Employment act of 1967, Meredith agreed to pay

—the equivalent of his existing base pay, and a pro rata share (equal to Nine Thousand Three Hundred Seventy-Five Dollars ($9,375) of the —Stay Bonus provided for in section 5.3 of the Employment Agreement, through September 17, 2010.

But Meredith’s September 25, 2009 proxy states on p. 24 that Griffin isn—t entitled to a Stay Bonus or a continuation of health benefits if he left voluntarily. Thus, the company gave him an extra month and a half’s worth of the stay bonus (which, per the Employment Agreement, was paid at the rate of $6,250 per month so long as Griffin worked for Meredith), and it gave him nearly two months of extra health benefits, through September 30, 2010.

The company doesn—t explain why it paid Griffin so much money following such an abrupt departure; it seems unlikely that Griffin would sue Meredith for any claim when he left voluntarily for an even higher profile job (for which no Employment Agreement has been filed yet). But perhaps the board harbors hope that someday he will return?

Image source: Aresauburn at flickr

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