Postmedia brass pocketed bonuses for Sun acquisition

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In the throes of deep cost-cutting, Postmedia Network Canada Corp. paid $925,000 in bonuses to executives for stick-handling a deal to acquire the Sun newspaper chain, and more than $1-million in severance to its ousted chief operating officer.

Company disclosures released Wednesday show that bonuses boosted total pay to Postmedia's six most senior officers in 2015, even as the company reported weak financial results that fell short of profitability targets tied to incentives.

Postmedia president and chief executive officer Paul Godfrey was paid $1.76-million for the 2015 fiscal year, up from $1.42-million in 2014. His base salary remained $950,000, and in May, his contract was extended until 2018.

The newspaper company – Canada's largest chain with more than 200 print and digital news brands including the National Post, Ottawa Citizen and Vancouver Province – has undergone massive cutbacks to cope with rapidly declining print revenue, as well as the cost of servicing more than $670-million in high-priced debt. Postmedia recently cut $131-million in annual costs over a three-year stretch, and is now slashing another $50-million over two years. Its net loss for the year was $263-million, including $153-million in writedowns.

The $316-million deal to buy Sun Media's English-language papers and the Canoe.ca Web portal from Quebecor Inc., which was announced in late October of 2014 and closed in April, 2015, bought the company time and scale as it seeks to boost its digital revenue and turn around a deeply troubled business. It also proved lucrative for Postmedia's leaders.

The company paid Mr. Godfrey a $400,000 bonus for steering the deal, plus $200,000 to chief financial officer Doug Lamb. Four other executives received between $25,000 and $150,000 in bonuses, respectively, "In recognition of the extensive additional work undertaken by the [named executive officers], among others, in connection with the Sun acquisition and the integration of the properties acquired," according to a public filing.

One key figure in that deal, chief operating officer Wayne Parrish, left the company in June, saying in a statement that "it's the right moment for me to take advantage of other opportunities." Documents confirm he was pushed out and paid a lump sum of $1.04-million in severance – two times his base salary of $475,000, average annual bonus and car allowance – as required by his contract for termination without cause. He continues to receive benefits for two years, and has a six-month non-compete clause.

Mr. Godfrey was the lone executive to receive a bonus for short-term incentive targets, earning $118,750 out of a possible $950,000. Other executives face a slightly higher threshold that wasn't met.

A Postmedia spokesperson declined to comment. Executive compensation is set by a committee of six directors.

The company also nominated four new members for election to its board of directors, with a vote set for January.

One nominee is Ted S. Lodge, a partner at GoldenTree Asset Management, the New York-based fund manager that owns substantial portions of Postmedia's debt and equity, giving it sway over the company's future. Mr. Lodge is a partner at GoldenTree specializing in "restructurings and turnarounds," according to Bloomberg. He would succeed his colleague, founding partner Steven Shapiro, who has handled GoldenTree's investment in Postmedia assets since many of them belonged to CanWest Global Communications Corp.

The three others standing for election are private equity adviser Stephanie Coyles, corporate director Wendy Henkelman, and digital marketing expert Mitch Joel.