Younger Post employees, at that point, might have wondered: A rich pension plan? Where did I miss the sign-up for that?
They didn’t. In 2009, The Post closed its pension plan to new employees — and those who remained in the plan had their benefits frozen after Amazon founder Jeff Bezos acquired the newspaper.
The pension fund itself, however, didn’t freeze. As federal filings show, it has fattened to the point that it can finance 240 exit packages without breaking an actuarial sweat.
On one level, that’s a luxury: The Post can use this kitty to pare its payroll without having to pay severance packages out of its budget for news coverage. Yet the instrument carries something of a generational bias, leaving younger staffers who take a buyout at a comparative disadvantage vis-à-vis their more senior colleagues. The reliance on this holdover from a richer era of the newspaper business shows one blessing of being a legacy company — but also what present-day employees have lost to the age of the 401(k).
By Stonesifer’s account, the newspaper will still carry “significant loss going into 2024,” an amount that the New York Times placed at $100 million earlier this year. On Monday, Stonesifer introduced The Post’s next permanent publisher and CEO, William Lewis, who said he was supportive of the buyout but declared that the path to profitability comes “not through cutting; it’s through growing.” When asked to reconcile his support for the buyouts with his commitment to growth, Lewis responded, “That chapter is going to come to a close and then we’re going to drive forward.”
The Post may have mismanaged the transition to a post-Trump media environment, along with facing such industry-wide challenges as dwindling news referrals from social media. The same cannot be said, however, of its approach to pension finances. In 1975, investing wizard Warren Buffett sent a memo to Katharine Graham, then CEO of The Washington Post Co., outlining a new direction for investing the company’s pension money: Unload adviser Morgan Guaranty and embrace investment aces at two smaller firms — Ruane, Cunniff & Goldfarb and First Manhattan.
The Post Co. took this advice, to the steady enrichment of its pension fund, which by 2007 was overfunded to the tune of $1 billion. By law, Post managers may use that account for benefits to participants (and beneficiaries) and administrative costs — but not to finance business operations. Though Bezos didn’t inherit the entire fund when he purchased The Post in 2013, the legacy Post Co. transferred enough assets to meet obligations to company employees, plus $50 million in overfunding.
According to the fund’s federal filings, Bezos has stuck with the two equity managers long relied upon by the Graham-run Post. And it has experienced Graham-level success: At the end of last year,, the plan had assets of $499 million versus liabilities of $245 million, for just over 2,800 participants. “That’s an extraordinary overfunding,” says Joshua Gotbaum, a guest scholar at the Brookings Institution and a former director of the U.S. Pension Benefit Guaranty Corp.
It’s no wonder, then, that The Post is looking to the pension fund to cushion the ongoing reduction in force. Terms are generous for veterans: Eligible employees with 15 years or more of service, for example, will be offered two years of base pay to a retirement account plus an extensive COBRA payment.
The picture for less tenured — and presumably younger — Posties features smaller digits. An employee with three years of service but less than five would walk away with nine months of base pay plus some COBRA assistance. Though that’s not at all stingy, the legalities of the program could stunt its appeal. Buyout-eligible employees younger than 55 would incur a 10 percent withdrawal penalty if they wanted to access their lump sums right away. COBRA contributions would be subject to the same penalty. “The Post’s buyouts are not as generous as they appear on first glance, and for many, they are not as generous as buyouts have been previously,” the Post Guild said in a statement. Guild chief steward Sarah Kaplan added, “We have definitely cautioned people that they should be wary” of the offers.
Some senior staffers at the Post — while they may not have to worry about that penalty — have their own fraught history with the pension plan. Starting in 2014, the Bezos-run Post halted accrual of pension benefits for employees who had started at the paper before the 2009 cutoff. “Literally, some people were going to lose hundreds of thousands of dollars,” recalls Fredrick Kunkle, a Metro reporter and former guild co-chair.
Union leaders inveighed against what they viewed as a gratuitous measure. “There is no conceivable reason to cut benefits from a fund so hugely overfunded,” they wrote in a 2015 flier. When pressed on the matter at a 2016 Post town hall, Bezos replied, “It’s important for businesses not to have uncapped liabilities.” In his new book “Collision of Power,” former Post executive editor Martin Baron recounts this conflict, calling it “unnecessary, with low monetary stakes and high costs in terms of morale.”
Bezos is not the only corporate leader concerned about “uncapped liabilities.” Major U.S. companies have sought to unload their pension obligations en masse over fears that the next market crash will swamp their funds. In its most recent annual report, the New York Times lists its pension obligations as a risk factor for its business prospects: “We will continue to look for ways to reduce the size and volatility of our pension obligations.”
Post leaders are unsure whether their package will induce enough voluntary takers to meet their goal of 240 departures, though there is an interesting analog in Post history. A 2008 buyout secured signatures from 231 Posties at an expense of nearly $80 million, according to a Post annual report.
The 2023 version — which is being offered to junior staffers commanding less lumpy lump sums — could be cheaper. That’s good for the bean counters and could fund future reductions in case Lewis & Co. encounter further headwinds. “It’s not a bad incentive to get people to help the company trim the payroll,” said the 62-year-old Kunkle, who is eligible for the buyout package, “but I love what I do. I’m not so sure I want to give up a job I love, you know?”
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