Amid another year of dramatic restructuring at Postmedia Network Canada Corp., the company's five most senior executives were awarded nearly $2.3-million in retention bonuses.
The payouts, which are outlined in company disclosures filed on Wednesday, are tied to a recent debt restructuring that wiped out more than $268-million (U.S.) in debt, thereby reducing the company's interest payments by about $50-million (Canadian) each year.
Canada's largest newspaper chain has endured a trying 2016 fiscal year that saw the company merge competing newsrooms in major cities, cut hundreds of jobs, offer staff buyouts and close a printing plant in London, Ont. The filings show that the five executives were not awarded regular short-term incentives because they missed a consolidated operating-profit target of $125-million, recording just $82.3-million for the fiscal year.
The retention bonuses were created "to ensure that key employees remained with Postmedia both during and after the Recapitalization Transaction," which was announced on July 7 and closed on Oct. 5, according to the documents.
"It's not uncommon in transactions like this for a key employee-retention program to be put into place as it was here, which was approved by the board and benchmarked against other similar transactions that have happened," said Phyllise Gelfand, the company's spokeswoman.
Rod Phillips, chair of the board of directors, was not available to comment.
Total amounts awarded under the plan include $900,000 to president and chief executive officer Paul Godfrey, $450,000 to chief financial officer Doug Lamb, $425,000 to chief operating officer Andrew MacLeod, $300,000 to executive vice-president and legal counsel Jeffrey Haar and $200,000 to Gordon Fisher, president of the National Post and the Pacific Newspaper Group.
The bonuses are due in three instalments, only one of which has been paid so far, with the remaining two due on Dec. 2 and on July 14, 2017, "subject to the satisfaction of certain conditions." That means only about $1.3-million of the total was accrued in the 2016 fiscal year.
Despite the bonus, Mr. Godfrey's total compensation declined slightly to $1.66-million in 2016, from $1.76-million in 2015, when Postmedia paid lesser bonuses to executives for negotiating a $316-million deal to purchase the Sun newspapers and related digital properties from Quebecor Inc.
Earlier this month, Postmedia announced it had extended Mr. Godfrey's contract, which had been due to expire at the end of 2018, for a further two years.
Compensation paid to Mr. Lamb, Mr. MacLeod, Mr. Haar and Mr. Fisher rose in the 2016 fiscal year, though base salaries paid to all five executives remained unchanged.
After announcing the debt restructuring in July, company executives struck a hopeful tone. Mr. Godfrey proclaimed the beginning of "a new chapter for Postmedia," which owns the National Post, Calgary Herald, Ottawa Citizen and numerous other newspapers. "We're going to have the ability to invest more," he said at the time.
But after Postmedia's net loss ballooned to $99.4-million in the fourth quarter, the company announced the latest in several rounds of aggressive cost-cutting, aiming to slash a further 20 per cent of salary costs as revenue continues to decline.
In the meantime, Postmedia is pursuing new digital ventures and partnerships, as digital advertising revenue has proven too meagre to make up for print ad sales that fell by more than 20 per cent in the latest quarter.
"We take a look at those companies that are digitally oriented and have real growth potential, and we're working with them," Mr. Godfrey said in late October.