In a new Securities and Exchange Commission filing, Dow Jones & Co. made 135 management employees eligible for a severance plan in the event of a change in ownership. Dow Jones, which publishes the Wall Street Journal, is the object of a $5 billion offer by News Corp. tycoon Rupert Murdoch. The Bancroft family, which controls Dow Jones, has slowly warmed to Murdoch’s bid.
Many companies fluff out their golden parachutes upon becoming takeover targets 1) so valued but skittish managers won’t jump ship and 2) to convince potential new hires of the operation’s future stability. Dow Jones previously had no formal change-of-ownership plan, although a small number of senior executives already qualified for lucrative severance packages, according to this New York Times story from May 3.
Parts of today’s parachute seem more like tin than gold. The company now promises eligible managers who get sacked within two years of an ownership change a minimum of 12 weeks severance. The existing bonus plan, pegged to employee performance in 2007, would be adjusted to account for the change in ownership. The filing also makes a provision for accelerating some stock options for eligible employees. If the change-of-ownership parachute is popped, the company pledges to cover the additional tax burden incurred by a “limited number of senior executives” in a process known as “grossing up.”
Murdoch would obviously clear the dead wood inside Dow Jones and dismiss staffers and managers whose tasks (legal, marketing, HR, etc.) could be performed by existing News Corp. divisions.
Howard Hoffman, director of corporate communications at Dow Jones, said the plan would apply to a “full spectrum” of employees, including some from editorial departments. Hoffman said the company was not disclosing the estimated cost of the compensation plan.
Bloomberg.com appears to have broken the Dow Jones parachute story late this afternoon.
Addendum: See this Wall Street Journal account for more. “A Dow Jones spokeswoman said the so-called tax gross-up would increase the value of Chief Executive Richard F. Zannino’s package—currently valued at a total of up to
The Bancrofts are killing us with suspense. Kill me with your views on this wrinkle via e-mail: email@example.com. (E-mail may be quoted by name unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)