When the New York Times (NYT) and its president and former chief executive, Janet L. Robinson, announced a few months ago that Robinson would step down at the end of the year – even though no successor had been identified – the news caught many off guard. The Times disclosed in an 8-K filed December 15, 2011 that it planned to pay Robinson $4.5 million for a one-year consulting gig; however, several interesting details about that consulting agreement weren’t available until the company filed its 10-K late last week.
We found Robinson’s Retirement and Consulting Agreement attached as Exhibit 10.34 to the 10-K filed February 23. Perhaps the most fascinating term is in the section that describes the consulting services that Robinson is to provide, where it states that in exchange for paying her $4.5 million: “…(c) you shall not be required to provide more than 15 hours of such services or assistance in any month.”
In fact, though, the agreement doesn’t really require Robinson to provide a minimum number of hours at all. It states that she:
“…shall provide consulting services as reasonably requested by the Company concerning Company matters with which you have been involved or have knowledge; provided that, in each case, (a) the Company shall provide you with reasonable advance notice when requesting such services or assistance, (b) the Company shall exercise reasonable efforts to schedule any services or assistance requested so as to not unreasonably disrupt your business and personal affairs and you shall exercise reasonable efforts to fulfill the Company’s consulting requests in a timely manner, notwithstanding your personal and other business commitments,…”
So if the Times never calls Robinson, she simply gets the $4.5 million. If it does call her and she ends up consulting for 15 hours a month, that’s an effective rate of $375,000 a month, or $25,000 per hour.
Actually, however, the money won’t be paid evenly over the one-year term. The agreement promised to pay Robinson $2.25 million in equal installments “during the period between January 1, 2012 and March 15, 2012,” and it will pay the other $2.25 million in equal payments “during the period between July 1, 2012 and December 31, 2012.” We can’t know whether the irregular timing of the payments was something Robinson requested or a term that the Times wanted, but ultimately both parties agreed to it.
The agreement also promised Robinson that she will get a bonus for 2011 and an award under the long-term incentive plan. The bonus will be calculated according to a complicated formula that considers such factors as her bonus target and the Times’ adjusted EBITDA. We’ll have to wait for the proxy – which we expect will be filed in mid-March, if the Times follows the same schedule as last year – to find out how much Robinson got. According to the 2011 proxy, Robinson most recently got a bonus of $1.85 million and another $474,375 as a long-term performance award for the 2006-2010 cycle. As it determines her current bonus and long-term performance award, the Times promised not to exercise negative discretion towards Robinson’s awards unless it does so for “executive officers generally.” There are so many variables at play here that we can’t speculate how much Robinson will get. But we did find this article that Bloomberg published late last month, which reported that “Robinson will receive an exit package totaling more than $21 million, higher than previously reported, said the people, who wouldn—t be named because the information isn—t public.” Next month’s proxy should answer the question for all of us.
Robinson was a veteran at the Times, having spent 28 years there at the time she left, including her term as president and chief executive officer since 2004. Perhaps the big payment as she left was simply to thank her for her long service and ease the sting of the meeting in which (according to the Times itself) Arthur Sulzberger Jr. reportedly told Robinson that it was time to “[install] a different type of leadership at the company.” If that’s the case, though, perhaps they should just call it what it appears to be – a separation payment – rather than a consulting fee.
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