On his last day on the job, Torstar Corp. chief executive officer Rob Prichard faced a barrage of questions about his $9.6-million severance package - which comes amid layoffs and a stock price that has lost more than 80 per cent from its peak.
Mr. Prichard, who announced his departure three months ago, sat mostly silent during the company's annual meeting Wednesday while representatives from the union representing Torstar employees questioned how he could take such a lucrative payout, despite cost cuts and layoffs. The departing CEO faced calls to surrender some of that money in light of similar moves made by executives at other North American companies in recent months.
However, the questions on his severance were mainly fielded by Torstar chairman Frank Iacobucci, who said Mr. Prichard's payout was a contractual arrangement the company is required to fulfill. The severance has been held up as one of the more controversial pay packages in Canada at a time when such deals are increasingly considered in poor taste given job cuts and falling stock prices.
"The CEO has a contractual right to receive severance, and the board honours that contract," Mr. Iacobucci told shareholders. "The board unanimously determined that the arrangement was in the best interest of the company."
After the meeting, Brad Honywill, president of the Southern Ontario Newsmedia Guild, said the board must also take responsibility. "The board should be held accountable," Mr. Honywill said.
Concerns about the severance have swirled inside the company since it was made public a few months ago. Torstar told shareholders it took a $12.8-million charge in the first quarter, most of it related to Mr. Prichard's compensation. It also comes as Torstar is in the middle of cutting 260 people across the company.
"There is a groundswell of anger and resentment towards the severance package for you Mr. Prichard," said Dan Smith, a union representative and employee in the newsroom of the Toronto Star, the company's flagship publication. "That kind of money seems neither right nor fair to us."
Mr. Iacobucci suggested the deal was negotiated under different circumstances than the company, the media sector and the economy now face. With a recession causing advertisers to tighten spending, Torstar, which owns newspapers and the Harlequin book publishing division, recorded a $21.4-million loss in the first quarter, compared with a loss of $3-million a year ago. Revenue dropped $12.3-million to $339-million.
Mr. Prichard is taking an adviser role at Metrolinx, a regional transit agency. In response to the questions, Mr. Prichard acknowledged it was a "tough" time for the company but also said the money was part of his contract in 2002. Torstar shares peaked at $31.45 in early 2004, but have since fallen to $6.
Torstar's interim CEO David Holland said the company is working through the tough economy, but is optimistic there will be an advertising rebound in 2010. "Looking forward to the balance of 2009, our economic outlook remains a concern given the sensitivity of ad revenues," he said.
Torstar is also a minority owner in CTVglobemedia Inc., with a 20-per-cent stake in the parent company of CTV and The Globe and Mail. Though CTVglobe is privately owned, Torstar's financials show the company had $503-million in revenue in the quarter ended Feb. 28, down from $517-million in the previous quarter ended Nov. 30, 2008. Comparable results from the year prior were not available. It had a net loss of $34.6-million, compared with a loss of $2.3-million in the previous quarter, due mostly to a $31-million impairment from the writedown of the company's TV assets. Torstar also listed CTVglobe's long-term debt at $1.9-billion.