The terrorism-driven battle against the economy of the United States continues to plow through companies.
Emmis taketh away
and giveth too
The parent company of KHON and KGMB television in Honolulu yesterday morning announced a 10 percent pay cut, but with an equivalent award of company stock to affected employees. Employees have a choice of three stock plans. Indiana-based Emmis Communications Corp. cannot force the wage cut on employees covered by collective bargaining agreements or personal services contracts, and is to contact unions to explore possible concessions.
In a companywide conference call at 9 a.m. Hawaii time, employees were told of the plan to reduce payroll costs and increase cashflow.
KHON Vice President and General Manager Bill Spellman and KGMB General Manager Lynne Mueller were briefed in advance during a trip to Indianapolis this week.
"I just applaud them," Mueller said, calling the wage-for-stock arrangement "well-conceived" and "basically a wage cut turned investment in the company."
"It's an incredibly creative way of trying work through the economic difficulties we're all facing right now," Spellman said, expressing pride in the company for finding what he believes is unique way to stay financially healthy while keeping people employed.
"The other bonafide upside is that you get employees to participate in (company) stock, and Wall Street loves that," he said.
The company's most visible Hawaii employees are in the news departments. In KGMB's, most are covered by union or personal services contracts and are exempt from the mandatory pay cut and stock award, according to News Director Bob Loy.
"In general, the mood in the newsroom is relief and there's a sense of pride that they're working for a company that's come up with a solution that takes people into account rather than just numbers," he said.
"Lower pay supplemented with some equity is common," Hawaii Venture Group LLC President Randy Havre said, but such deals are usually offered at the time of hire as opposed to this type of situation.
Employees should consult with human resources officials, Havre said. "If I were an employee I'd have questions about withholding and payroll taxes and my ability to sell (the stock)."
Emmis stock closed up 11 cents to $15.53 yesterday on the Nasdaq Stock Market.
"While other companies are instituting massive layoffs, we decided to address the issue in a manner that fits Emmis," said Chairman and CEO Jeff Smulyan.
Erika Engle is a reporter with the Star-Bulletin.
Call 529-4302, fax 529-4750 or write to Erika Engle,
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu, HI 96813. She can also be reached