At Meredith Corp., “Improvement Plan” Leads to Big Raises

September 28, 2009

Publishing companies are still taking a beating, and that’s certainly true at Meredith Corp. (MDP), the Iowa-based media giant that owns 12 television stations and a radio station; it also publishes books and countless magazines, including classics such as Ladies— Home Journal, Better Homes and Gardens, and Family Circle.

In Meredith’s annual report, filed August 25, the company reported a net loss for fiscal 2009 of $107.1 million and a 15 percent decline in advertising revenues. Writedowns for expenses such as license fees, severance packages, and payments to reduce the company’s debt level also contributed to the losses. A double-digit slide in the stock price followed that news.

So in light of that, the proxy that Meredith filed Friday afternoon — and, specifically, the big jumps in compensation that the named executives got — came as a surprise. (Although a bit of digging revealed that this is consistent with what Meredith did in August, 2008, which Michelle blogged about here.)

In the proxy, the company disclosed that president and CEO Stephen Lacy’s total compensation jumped from a bit more than $4 million in 2008 to nearly $5.8 million in 2009. John Griffin, president of the publishing group, saw his total compensation jump from just under $2 million to almost $2.36 million. President of the broadcasting group, Paul Karpowicz, saw his total compensation jump from $1.66 million in 2008 to more than $2 million in 2009. And John Zieser, chief development officer and corporate counsel, got an increase from $1.5 million in total compensation to nearly $1.77 million.

The proxy itself didn—t explain the raises, so we went back to the Aug. 25 annual report to look for clues. On p. 17, the company stated it had created a —three-pronged performance improvement plan.—¯ It included a plan to gain market share, create new streams of revenue, and use —disciplined and —aggressive efforts to control expenses and manage cash. While the company didn’t explicitly tie the improvement plan to the upcoming raises, it did strike an optimistic note for the company’s future performance.

Around that same time, in mid-August, Meredith rebranded itself with a new corporate logo and an internal shuffle of the various divisions. It also declared a dividend, proclaiming, —The Company has paid a dividend for 62 consecutive years and has increased its dividend for 16 consecutive years. By the beginning of September, the company appointed new executives (see here and here).

Yet there are some skeptics who didn’t seem convinced that the re-branding, new leadership, and improvement plans were enough to make the stock a solid bet. This article reported that —stock traders have less confidence in Meredith Corp. than they do in [two other publishing companies] — noting that Meredith had a higher short-interest ratio than the other companies (meaning that it would take longer for traders to cover their short positions).

Loyal shareholders are probably hoping that when proxy season rolls around in 2010, that real profits will come first… and the executives’ raises – if any – will be based on those profits, not just a plan to earn them.

Image source: Ladies’ Home Journal

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