NYT Co. retracts exec options, issues correction

New York Times Co. retracts exec stock options, issues correction after breaking own rules

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NEW YORK (AP) -- The New York Times Co. issued an unusual correction Friday to fix a mistake that indicated the newspaper publisher's board of directors didn't know the company's rules governing executive compensation.

The admission involved stock option awards and other incentives handed out in the past 19 months to Janet Robinson and Arthur Sulzberger Jr., the Times Co.'s top two executives. In addressing the problems, the company took steps to ensure both Robinson, the company's chief executive, and Sulzberger, its longtime chairman, will still have a chance to make almost as much money as the board originally intended.

The errors stemmed from limits that the owner of The New York Times and Boston Globe imposed on how many stock options and how much incentive pay its top executives are eligible to receive annually.

Under a plan adopted in 1991, the Times Co. decided its executives shouldn't get more than 400,000 stock options each year.

But the company gave Robinson 650,000 stock options in 2008 and 500,000 more options earlier this year. Sulzberger received 500,000 stock options earlier this year, too.

The options are issued with a price that doesn't change even as a company's stock fluctuates. The holders of the options profit if the market value of a stock rises above the option's exercise price.

The Times Co.'s excessive stock options, totaling 450,000 between the two executives, have been canceled and replaced with a different type of stock incentive. The new awards, called "stock appreciation rights," will vest on the same schedule and have the same exercise prices as the voided options.

In another misstep, the Times Co. discovered it had drawn up an incentive plan that would have allowed Robinson and Sulzberger to each get a $3.5 million cash bonus for the three-year periods of 2009-2011 and 2010-2012. The problem: No Times Co. executive is supposed to paid more than $3 million under the plan. The company retroactively lowered the potential payments to Robinson and Sulzberger to the $3 million maximum.

The payments supplement the two executives' seven-figure salaries, which have been frozen since 2006 because a sharp decline in advertising sales has squeezed the Times Co.'s finances. Sulzberger's salary is $1.09 million and Robinson's is $1 million. The salaries have irked some workers at the Times Co.'s newspapers, where wages have been cut to help offset a 20 percent decline in revenue through the first six months of this year.

The Times Co.'s disclosure about the errors to the Securities and Exchange Commission didn't explain how the mistakes were discovered or why they occurred. A Times Co. spokeswoman declined to elaborate Friday.

The company's executive packages were drawn up in 2008 and 2009 by a board committee chaired by venture capitalist David Liddle. There are currently four other directors on the company's executive compensation committee: financier James Kohlberg; Dawn Lepore, CEO of Drugstore.com Inc.; Ellen Marram, president of The Barnegat Group, a business advisory firm; and Thomas Middelhoff, former CEO of Bertelsmann AG. Neither Kohlberg nor Lepore were on the committee in 2008.