CEO Flies Off With Golden Parachute

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by Paul Bass | Feb 26, 2009 12:31 pm

(9) Comments | Commenting has been closed | E-mail the Author

Posted to: Business/Labor/ Economic Development, Media/ Books

james%20w%20hall.png The top executive of the bankruptcy-seeking parent company of the New Haven Register has left the building — buoyed by a secretive departing bonus.

The clues to that payout appear buried deep amid the hundreds of pages the Journal Register Co. filed in federal bankruptcy court last Saturday. The Yardley, Pennsylvania-based chain, struggling with a debt estimated at between $500 million and $1 billion, is seeking protection from creditors under Chapter 11 of the bankruptcy code. The company owns the New Haven Register and 19 other daily newspapers and some 180 weeklies.

The company revealed in a bankruptcy court filing that James W. Hall (pictured) is no longer the company’s top executive. He has been replaced by Robert Conway, whose title is “chief restructuring officer.” That arrangement was described in this Feb. 23 filing and this “transition memo,” which also details arrangements with major lenders.

Meanwhile, before skipping out, CEO James Hall worked out a potentially lucrative departing bonus with the company’s major lender. He started cashing out before he filed the company’s bankruptcy papers — and secured a promise from lenders not to go after him later for the money.

The revelation follows the disclosure that the company seeks to pay other top execs $1.7 million in bonuses — some called “shutdown bonuses” — in return for continuing to lay off workers and close newspapers. Connecticut Attorney General Richard Blumenthal said he plans to file an objection to those bonuses as the bankruptcy case unfolds.

Assistant Attorney General Denise Mondell started that process Wednesday by entering an appearance in the case.

The next court hearing on the company’s bankruptcy petition is scheduled for March 17.

Last-Minute Maneuver

The details of CEO Hall’s parachute remain incomplete, pieced together from statements scattered through different court filings. The company’s disclosure of the arrangement gives new meaning to the term “burying the lede.”

The fact that Hall entered into a “transition and separation agreement” with lenders on Jan. 20 — a month before the bankruptcy filing — is mentioned in a single paragraph on page 10 of a disclosure statement appearing on this page of a Journal Register company website. (Warning: readers with Macintosh computers may have trouble downloading the document. It’s in a folder entitled “Disclosure Statement and Plan of Reorganization”).

Here’s what the paragraph, titled “Separation Agreement With James Hall,” reads:

“The Consenting Lenders and the Existing Agent shall not, as long as the Plan Support Agreement is in effect, initiate, participate or cooperate in any manner in any proceeding to avoid or seek disgorgement of, under chapter 5 of the Bankruptcy Code or otherwise, the ‘Settlement Payment’ and the other payments provided for in that certain Transition and Separation Agreement between JRC and James Hall, dated as of January 20, 2009.”

That means that lenders agreed not to try to convince the judge to order Hall to return money he has already paid himself under his parachute deal, according to a New Haven-based bankruptcy expert who reviewed company filings and translated that paragraph for the Independent. The key word is “disgorgement.” That means trying to get the money back.

What are the details of that parachute agreement? Those can be found under the referenced “Transition and Separation Agreement” that was struck on Jan. 20. At this point, Journal Register has chosen not to make that document public. It will have to at some point. For now, the public and shareholders don’t know.

Company officials in New Haven and Pennsylvania has declined to return repeated requests for comment on the bankruptcy.

A clue to the possible scope of the parachute can be found in separate documents Journal Register filed with the federal Securities and Exchange Commission.

The first is this “Change of Control Employment Agreement” dated Nov. 30, 2007. (Hall, who’s 61 according to the company website, took over chairman and CEO that same month.)

Section 5 (pages 7-8) details then-current terms of payouts to Hall if he leaves the company. The payout is comprised of a complicated formula adding his average salary to his average bonus over previous years. If he had left the company in 2008, that combined figure would be $600,000, according to the agreement. Hall would continue to receive benefits for two more years.

Those number might be larger now, because his salary and bonuses were raised, according to this SEC-filed employment agreement, also dated Nov. 30, 2007. It set Hall’s base annual salary as $675,000 plus bonuses of potentially double that amount.

Is the actual parachute he grabbed last month based on those numbers, or different ones? That’s one of many secrets awaiting the light of public disclosure as the crumbling of a slash-and-burn corporate newspaper chain proceeds in a New York courtroom.

Comments

posted by: ROBN on February 26, 2009 12:49pm

I FEEL LIKE I’M ABOUT TO DISGORGE SOMETHING BUT IT AIN’T CASH.

posted by: jawbone on February 26, 2009 2:22pm

Like that smirk in the photo. The grey side fins ain’t working, though.

posted by: Doug on February 26, 2009 4:10pm

Another bloodsucker.

posted by: Peter on February 26, 2009 4:54pm

disgusting…I will never pick up the Register again. EVERYONE BOYCOTT

posted by: anon on February 26, 2009 5:24pm

I love how the transition to online news sites means that this guy’s legacy will be articles about how much of a bloodsucker he is. Whenever James W. Hall’s grandkids do a google search on their papa, they’ll come up with articles like Paul’s.

Hopefully Mr. Hall will use his newly-found wealth to start a James W. Hall foundation. That might help sugarcoat things a bit.

posted by: City Hall Watch on February 26, 2009 9:09pm

The Register Companies and other paper media newspapers ruined their companies by taking on too much debt and then in order to meet escalating debt payments, began cheapening the news, short circuiting coverage, hiring inexperienced reporters, sucking up to power and abandoning its core mission of being the 4th estate and a watchdog on power. Hall is just the latest in a long line of greedy bastards who have run these companies in to the ground.

posted by: Anon on February 26, 2009 9:35pm

This individual’s deal with the skeletal compensation committee - all that remains of the JRC board - would have given the Journal Register Company a bad name. But it already had that. All the other separated peons are awaiting the time we qualify for food stamps. So, here’s hoping Mr. Hall et al get their full share from the same fountain of life of which the genius of JRC - the late Bob Jelinec - had his final surfeit of sympathy and justice. God Bless you, Mr. Scrooge.

posted by: City Hall Watch on February 27, 2009 10:15am

Today, the Rocky Mountain News, publishing for more than 150 years, published its own obit. The San Francisco Chronicle, one of the best read newspapers in the nation is considering closing. The Tribune Companies, once a great company, breaking many stories and the eternal watchdog extraordinaire in Chicago, severely crippled by debt and egos. Debt and egos - is there a lesson?

posted by: JMS on February 27, 2009 5:00pm

I stopped reading the Register many many years ago. It’s nothing more then poorly written, sensationalized local coverage with a bunch of chopped up stock AP news stories to fill in the spots where they couldn’t sell advertising to car dealers. I know print newspapers are suffering all over the country… but the register deserved to die a horrible death well before that started happening. It’s a poor excuse for a newspaper.

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