This article is reprtined from "Reflections of a Newsosaur," a blog by Allen D. Nutter, former editor turned critic:
How the shrewder CEO cashed out at MNI
The year 2007 was a tough one at the McClatchy Co., as it struggled to integrate the complex and costly acquisition of Knight Ridder at the same time a steady deterioration in advertising sales began picking up steam.
But the company seemed to be in luck. It had not one, but two, experienced chief executives on its board of directors – the incumbent Gary Pruitt and former Knight Ridder boss Tony Ridder.
Unfortunately for MNI shareholders, the shrewder one evidently got away. Tony left the board in May.
Before he departed, however, Tony demonstrated his superior wisdom by dumping at least 87% of his MNI stock, according to filings at the Securities and Exchange Commission. In transactions completed as of Nov. 30, 2007, he netted $3.6 million at an average price of $39.61 per share, or roughly 10.7 times more than the stock would be worth today at its close of $3.69 a share.
Gary Pruitt, the guy who stuck around, did hedge his bets to some degree, selling about half his shares as of Feb. 4, 2008. Gary collected $3.1 million at an average price of $32.59 per share, or roughly 8.8 times more than the stock would be worth today.
After being paid some $20.6 million for engineering the sale of KRI to McClatchy in the summer of 2006, Tony probably wasn’t hard up for cash. So, his decision to liquidate nearly all of his McClatchy holdings suggests that he suspected things were not going swimmingly in Sacramento.
Could Tony have been alarmed by the burden of the more than $2 billion in debt that MNI shouldered to help fund the $4 billion-plus KRI acquisition?
Was Tony worried about the company’s inability to develop cutting-edge products and strategies to create new sources of revenue in response to the quickening decline in the traditional newspaper advertising business?
Did he doubt the discipline of management to aggressively cut expenses enough to fund the transition of the business away from its print legacy and into the digital future?
Or, was Tony simply concerned that McClatchy’s senior managers were too inbred and too self-absorbed to objectively face up to the company’s growing problems?
These issues evidently were clear enough to motivate Tony to get out while the getting was good.
So, you have to wonder: Did Gary miss them? Or just not know what to do?
But the company seemed to be in luck. It had not one, but two, experienced chief executives on its board of directors – the incumbent Gary Pruitt and former Knight Ridder boss Tony Ridder.
Unfortunately for MNI shareholders, the shrewder one evidently got away. Tony left the board in May.
Before he departed, however, Tony demonstrated his superior wisdom by dumping at least 87% of his MNI stock, according to filings at the Securities and Exchange Commission. In transactions completed as of Nov. 30, 2007, he netted $3.6 million at an average price of $39.61 per share, or roughly 10.7 times more than the stock would be worth today at its close of $3.69 a share.
Gary Pruitt, the guy who stuck around, did hedge his bets to some degree, selling about half his shares as of Feb. 4, 2008. Gary collected $3.1 million at an average price of $32.59 per share, or roughly 8.8 times more than the stock would be worth today.
After being paid some $20.6 million for engineering the sale of KRI to McClatchy in the summer of 2006, Tony probably wasn’t hard up for cash. So, his decision to liquidate nearly all of his McClatchy holdings suggests that he suspected things were not going swimmingly in Sacramento.
Could Tony have been alarmed by the burden of the more than $2 billion in debt that MNI shouldered to help fund the $4 billion-plus KRI acquisition?
Was Tony worried about the company’s inability to develop cutting-edge products and strategies to create new sources of revenue in response to the quickening decline in the traditional newspaper advertising business?
Did he doubt the discipline of management to aggressively cut expenses enough to fund the transition of the business away from its print legacy and into the digital future?
Or, was Tony simply concerned that McClatchy’s senior managers were too inbred and too self-absorbed to objectively face up to the company’s growing problems?
These issues evidently were clear enough to motivate Tony to get out while the getting was good.
So, you have to wonder: Did Gary miss them? Or just not know what to do?
Disclosure: I own MNI shares
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