Alan Mutter points out McClatchy's plan to stop paying dividends after the upcoming April payment might cause the board of directors to take a look at Gary Pruitt's performance as CEO. A really, really close look.
The upcoming dividend cancellation certainly qualifies as an event that will come at the expense of stockholders. And the largest group of affected shareholders is the members of the founding McClatchy family, who control 41% of MNI’s stock.I have no idea what is taking the board so long. Photo credit: AP/H.W. Chiu
The elimination of their dividends may cause them to take a closer look at the management of the company by Gary Pruitt, the chief executive who engineered the $4.4 billion acquisition of Knight Ridder in 2006 that saddled MNI with much of the debt that now clouds its future. MNI subsequently was forced by accounting rules to declare more than three-quarters of the value of the Knight Ridder deal as a loss.
After serving for years on the four-person board that manages the family stock holdings, Pruitt quietly resigned from the family board in September, citing a conflict between his role as CEO and a director of the trusts.
With Pruitt no longer attending the trust meetings as the dividends dry up, who knows where the conversation might go?
- McClatchy to pay 9 cent dividend this quarter, suspends subsequent dividends
- Pruitt resigns from family trusts