McClatchy ‘avoids budgeting’ furloughs for 2014, but implements one-year wage freeze

logoMcClatchy’s CEO tells employees that “the company is working hard to avoid furloughs that are disruptive, discouraging and financially difficult to manage,” but wages will be frozen in 2014.


DATE: Oct. 17, 2013
TO: All Employees
FROM: Pat Talamantes
SUBJECT: 2014 Compensation Update

Over the last several weeks, senior leadership throughout the company has been working to develop a 2014 budget that ends furloughs companywide while managing ongoing declines in print advertising revenue and operating cash flow. After extensive review, we’ve settled on trying to break the furlough cycle and avoid budgeting them for 2014 by, instead, budgeting for an across-the board, one-year wage freeze beginning Dec. 30, 2013, the first day of the 2014 fiscal year.

Each furlough is roughly equivalent to a 2 percent wage cut. We must find ways to replace furlough savings, and a wage freeze will close much of this gap. That means delaying future wage growth for all employees, but 2014 base pay should be higher for almost everyone who participated in furloughs this year (assuming no other changes to jobs, hours or schedules)./CONTINUES

Careful expense management remains necessary as the economy and print revenues continue to be a challenge. We’ve made tremendous progress in diversifying our revenues by developing new products, services and digital opportunities for both our audience and advertisers to help offset print revenue losses.



Today, 39 percent of McClatchy’s revenue comes from sources outside of the daily newspaper in the form of digital advertising and direct marketing. So while we remain very optimistic about our future, we still need to take steps today to offset overall revenue declines. Furloughs have helped us to manage short-term changes in business conditions, but the industry’s challenges are long-term in nature, so we will work hard to avoid reinstituting them in the future, absent sudden or more significant changes in our business performance.

This wage freeze is being instituted across all of McClatchy, including at corporate. For those employees covered by a collective bargaining agreement, the implementation of the wage freeze is subject to the terms of the agreement and will be reviewed with your union leadership. Employees for whom salary reviews are pending or whose scheduled salary review dates fall before the Dec. 30, 2013, freeze date remain eligible for their 2013 salary reviews. However, the next merit review date for all employees will be two years from their 2013 review date. For example, if your last merit increase was
April 1, 2013, your next salary review will be postponed until April 1, 2015. You will, however, receive regularly scheduled performance reviews during this period.

We know some employees may find this wage freeze disappointing, but we hope you’ll recognize that the company is working hard to avoid furloughs that are disruptive, discouraging and financially difficult to manage. Please let your local human resources department or publisher know if you have any questions about your salary or review dates.

Thank you.

— h/t Bill Cooke and others who don’t want to be named

* McClatchy executive compensation: up 5.86% in 2012 (