McClatchy reveals names of former executives with $118 million in special pension claims
Hundreds of former McClatchy and Knight Ridder employees ranging from CEOs to sports columnists were owed supplemental pensions totaling more than $118 million at the end of 2019, according to a document filed this week in bankruptcy court by McClatchy Co. lawyers.
The nation’s second largest local media company stopped paying the special pensions before declaring bankruptcy in February. This week’s filing marks the first time that the company revealed the names and amounts.
Gary B. Pruitt, McClatchy’s former chief executive who engineered the deal to buy the larger Knight Ridder chain in 2006, tops the list at $14.5 million. Pruitt left McClatchy six years after the purchase to become chairman and chief executive officer of the Associated Press.
When McClatchy sought protection from its creditors in mid-February, it cited the twin burden of its legacy pension obligations and the crushing debt from the Knight Ridder purchase. It has asked the federal government to take over its standard plan, known as qualified pensions.
The supplemental pensions are not covered by the government, so the pensioners are asking the bankruptcy judge to force McClatchy or its new owners to honor past promises. But the numbers show the weight of the special pensions on the company’s bottom line.
The supplemental payments were scheduled to go to 596 former top executives, publishers, board members, corporate executives, executive editors and even a few columnists.
The amounts speak to a much happier time in the news business, before the internet wreaked havoc on advertising dollars and circulation and before readers received their news via free social-media platforms such as Twitter and Facebook.
At least 11 former executives were owed more than $1 million, according to the filing.
Pruitt served in numerous leadership positions in McClatchy from 1984 to 2012 and was head of the newly merged company through the Great Recession of 2008-2009, a difficult time that proved to be the beginning of the end for newspaper industry finances.
AP’s media relations office did not respond to an email seeking comment from Pruitt.
Pruitt received compensation valued at $5.6 million in 2006, the year of the merger with Knight Ridder, including a $1 million bonus, according to regulatory filings.
Knight Ridder’s generous pension plan was an unpleasant legacy of McClatchy’s purchase. Pruitt received a much larger supplemental pension than the CEO who succeeded him, Patrick J. Talamantes. Talamantes, who was McClatchy’s chief financial officer for more than a decade before serving as CEO from 2012-2017, was owed about $685,000.
Former Knight Ridder chairman P. Anthony “Tony” Ridder was owed $5.3 million, according to the supplemental filing. Ridder helped rally the former executives to file a claim in bankruptcy court. A lawyer representing the group did not respond to a request for comment Wednesday.
McClatchy lawyers filed the supplemental document this week as the end dates approached for when creditors can bring claims in bankruptcy. The fate of McClatchy, which has published since the days of the California Gold Rush, is nearing a critical phase.
Under proceedings at the U.S. Bankruptcy Court for the Southern District of New York, McClatchy has pursued a dual-track strategy. One track involves the possibility that its largest debt holders, led by hedge fund Chatham Asset Management, would emerge with a controlling interest.
The other track involves an auction process. Binding bids are due July 1, with an auction scheduled for July 8. Judge Michael E. Wiles must OK the bidder on July 24.
At least 20 parties signed non-disclosure agreements to review McClatchy finances, the Sacramento-based news chain has said.
This story was originally published June 17, 2020 at 7:35 PM with the headline "McClatchy reveals names of former executives with $118 million in special pension claims."
