Wednesday, March 12, 2008
Should I Take a Buyout?
Q. My publisher put out a memo saying voluntary newsroom buyouts are now being considered.
I am over 60 and have been with the company for about 30 years. I have no dependents, a mortgage, a car payment and $6,000 in credit card debt.
On the asset side, I have a 401k, which took a $20,000 hit in the stock market decline last month but is still a respectable six figures; a company pension if they honor it, and so far I haven’t heard otherwise; and Social Security.
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I've had a rewarding career but my health is not great, and I don't agree with the direction my newspaper is headed. All of which is to say, now seems like a good time to leave.
To help me make that decision, though, can you tell me how buyouts are typically structured? What should I look for in evaluating an offer if its made to me?
I've searched the Poynter Web site for "buyout," by the way. Although the search returned a significant number of hits, the stories don't go into detail about what exactly was offered. Even though buyouts are prevalent in our industry, I don't know anyone who was actually offered one. I've also searched Nexis and our own newspaper archives, but there seems to be a veil of secrecy around this issue!
For an industry devoted to communication, we have avoided explaining what the elements of a buyout are, what the difference is between a good one and a not-so-good one and how one makes that determination. It's not strictly about money, is it? Health care is going to be a big issue for me, for instance and, I'm sure, for most everyone else in my situation.
Thanks for any help,
In LimboA. I will try to help. We did a round of buyouts at
The (Detroit) Free Press, but I declined.
I was visiting
The Dallas Morning News when 111 buyouts were accepted, and I have talked with journalists who were making these decisions in St. Lous, Cleveland, San Jose, Calif., Flint, Mich., and a batch of other cities.
Buyouts generally are offered to a group of people determined by two factors: Age and longevity. They typically are not selected or targeted. So, a buyout might be offered to all employees over 40 who have at least 10 years of experience. I am certain that if your newspaper offers buyouts, you will get an offer.
The offer letter will spell out the terms. Buyouts typically include a number of weeks of compensation for each year worked. A typical offer might be two weeks of pay for every year worked. A 30-year employee, in this case, would be offered 60 weeks of pay. However, the offer could be larger, and it could be capped. For example, it might be limited to a year's pay. Compensation may be offered as a lump sum or spread out over the number of covered weeks.
There is also usually a medical component. Benefits might be continued for a fixed amount of time or for the length of the covered weeks. Buyout packages are not negotiated individually.
Employees get a deadline by which to apply, in writing, for a buyout. This is usually a few weeks. Management then has a window to decide which offers will be accepted. Some will be declined because there are too many applications in one department or because the person is essential to the operation. Management usually is reluctant to turn down a request.
The announcements about who has been accepted are typically made all at once, but departures may be staggered to help newspaper operations run smoothly.
If you are offered a buyout, look carefully at the medical part of it and how the offer dovetails with your Social Security and Medicare.
For the entire staff, the buyout process is usually a time of no hiring, followed by some in-house shuffling to fill openings and then a resumption of hiring, especially if the buyouts have been oversubscribed. In cases where there are not enough buyout volunteers, layoffs can follow. A newspaper can go through more than one round of buyouts. Conventional wisdom has been that the first round of buyouts is usually the best, but this has not always been the case.
T
he recruiter asks back: What about you? If you have taken a buyout, tell us about the transition. And if you turned one down, how did you decide?
Add your comments here.
Coming Thursday: The path to journalism has not been as direct for this 25-year-old as it has been for some of her classmates, who are in their 20s. She worries that this slow start will hurt her.
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