(The opinions expressed here are those of the author.)
By Steven Brill
May 16 With the firing of New York Times
Executive Editor Jill Abramson last week, a dispute broke out
over whether her ouster by publisher Arthur Sulzberger Jr. had
anything to do with a complaint she reportedly made to Times
executives that she had not been paid the same as Bill Keller,
the man she succeeded.
Disclosure: Abramson is a good friend, so I have a favorite
in this dispute. But I do know a way to figure it out
objectively - with some simple reporting by a competent business
reporter. The result would be a story that I'm sure many people
would like to see.
The New Yorker's longtime media writer Ken Auletta reported
in two web dispatches this week that, shortly before her firing,
Abramson had complained to Times executives - and even hired a
lawyer to discuss the complaint for her - about her
compensation. She reportedly discovered that her salary in 2013
(and through this year) was significantly less than Keller made
during his last year on the job in 2010 - $503,000 for Abramson
in 2013/2014 and $559,000 for Keller in 2010.
Yet Sulzberger, responded, through his spokesperson, with
this statement, that Auletta duly reported: "It is simply not
true that Jill's compensation was significantly less than her
predecessors. Her pay is comparable to that of earlier executive
editors. In fact, in 2013, her last full year in the role, her
total compensation package was more than 10 percent higher than
that of her predecessor, Bill Keller, in his last full year as
Executive Editor, which was 2010."
Struggling to square Abamson's complaint with Sulzberger's
categorical statement, Auletta went on to note, (Times
spokesperson) Murphy cautioned that one shouldn't look at salary
but, rather, at total compensation, which includes, she said,
any bonuses, stock grants and other long-term incentives. This
distinction appears to be the basis of Sulzberger's comment that
Abramson was not earning 'significantly less.' But it is hard to
know how to parse this without more numbers from the Times.
Auletta is right. We need more numbers from the Times - and
I nominate the Times' most savvy, take-no-prisoners financial
reporter, Gretchen Morgenson, to take over the story from the
Times' media reporters and get the facts.
Here are some hints for where she should start.
In most public companies, an executive's total compensation has
three basic elements: salary, bonus compensation (which can be
in the form of additional cash, stock or stock options), and
It appears clear from Auletta's reporting, and the Times
non-denial denial, that Abramson's salary was, indeed, lower
As for their pensions, in a prior statement the Times
acknowledged that Keller's was higher. But a Times spokesperson
explained this credibly by noting that Keller had been employed
by the company longer and had benefited from a pension plan that
had been cut back in recent years as the Times faced the
financial headwinds afflicting all newspapers.
So, as Auletta speculates, that would leave the two
executive editors' annual bonuses as the element that could
allow Abramson to end up with more money while getting a lower
Annual bonuses are typically set at a percentage "target" of
the executive's salary, often 50 percent to 100 percent. So if
the executive makes a salary of $500,000 and the target is 50
percent, then the target bonus is $250,000. Whether one hits the
target depends on the criteria the board sets.
Though it is vague on specifics, the company's 2010 and 2013
proxy statements say that bonuses for senior executives, which
can be in cash or stock, are largely based on the company's
performance. Typically, in a public company that can mean that
maybe 25 percent to 50 percent of an executive's annual bonus
could be based on his or her personal performance while the
other 75 percent or 50 percent would be based on how the company
The Times' board seems to believe strongly that the
company's performance is key. As the Times' 2010 proxy statement
puts it, the purpose of the Times' Incentive Compensation Plan
is "(a) to attract, retain and reward directors, officers, other
employees and persons who provide services to the Company and
its Subsidiaries, (b) to link compensation to measures of the
Company's performance in order to provide additional incentives,
including stock-based incentives and cash-based incentives, to
such persons for the creation of stockholder value"
So, if the executive is making $500,000 and his or her
target bonus is, say, 75 percent, and 50 percent of that 75
percent is based on how the company does overall - not on the
executive's own performance - there can be large swings in
compensation that have nothing to do with whether the company
has determined, through its setting of the executive's salary,
the relative value of that executive compared to another.
Whether it was Keller's fault or not, there was not a lot of
stockholder value created at the Times in 2010, especially as
compared to 2013.
On Jan. 4, 2010, Times stock opened at $12.65. On Dec. 31,
2010, the stock closed at $9.80 - a 23 percent drop.
In 2013, the year Abramson's last bonus was determined,
Times stock opened on Jan. 2 at $8.79. It ended the year at
$15.87, an 81 percent rise.
So, let's assume - this is all speculation, I'm counting on
Morgenson to get the real numbers - that Keller and Abramson
both had target bonuses of 75 percent of their salaries, but 50
percent of that target depended on the company's performance.
Obviously, Keller would have gotten little or none of that
company-performance based 50 percent, while Abramson would
likely have gotten all or most of it.
Let's further assume (more speculation) that each made 100
percent of the personal-performance-based part of the target.
Abramson's bonus would have been 75 percent of her $505,000
salary, or $378,000, bringing her total compensation to
$883,000. But Keller would have gotten only 50 percent of his 75
percent target, or 37.5 percent of his $559,000 salary, for a
bonus of $210,000, making is total annual compensation in 2010
So, Keller would have earned a lot less than Abramson -
though the Times paid him more in earnings attributable to the
paper's assessment of his relative value compared to Abramson,
rather than earnings attributable to how the company fared.
Indeed, if Abramson had simply earned the same salary in
2013 as Keller earned in 2010, her total annual compensation
would have been $978,000, not $883,000, because the yield from
hitting her 75 percent target bonus would have been based on the
higher salary. And that's not even taking inflation - roughly 7
percent from 2010 to 2013 - into account the way we might
because we're comparing 2010 dollars to 2013 dollars.
Yes, it's hard to feel sorry for her in either case. But
those differences would be her pay equity argument.
If, as could easily be the case because lots of companies do
this, their target bonuses were, say, 100 percent with 75
percent based on company performance, Abramson would have made
out even better than Keller while still getting that lower
salary. Again, that would not be because the company put the
same or higher value on her work but because the company did
better, while placing a lower value on her (as expressed in her
The differences would have been still more pronounced if
part of the bonus award was in a set number of Times shares -
because the shares were worth twice as much for Abramson than
So, what Morgenson, Auletta, or another business reporter
needs to do is ask the Times what the target bonus percentages
were for 2013 and 2010; what portion of that target was
attributable, not to the executive's personal performance, but
to the company's performance, and whether any of the awards were
in pre-set numbers of shares of Times stock.
Or, Morgenson could do what she does so well: Get a leak
from a board member or executive in the know.
That's the way to resolve whether the Times did pay Abramson
fairly - or whether the company shortchanged her but can now
camouflage it because of factors having nothing to do with the
price they put on her services.
(Steven Brill, the author of Class Warfare: Inside the Fight
To Fix America's Schools, has written for magazines including
New York, The New Yorker, Time, Harpers, and The New York Times
Magazine. He founded and ran Court TV, The American Lawyer
Magazine, 10 regional legal newspapers, and Brill's Content
Magazine. He also teaches journalism at Yale, where he founded
the Yale Journalism Initiative. His latest published work is
"Bitter Pill," a special report in the March 4 issue of TIME on
medical bills. A copy of this column with links to websites
cited in the text is available here)