Senior executives at Time Inc. are buzzing with talk of a company-wide buyout offer that they expect will be offered to what one executive called "50-and-15" employees: those 50 years old and with more than 15 years at the company.
The moves come as Time Inc. seeks to cut costs in the wake of the AOL Time Warner merger and as it meshes aggressive profit goals set last fall with a declining ad market this year.
"An enhanced retirement program is being developed, and will be communicated to the staff sometime later in the spring," said a company spokesman, adding "the particulars of which we are in the process of developing."
Executives said their understanding of the package was that while severance payments would be small, the major incentives for those accepting it would be sweetened pensions. The company calculates pension payments based on the age of employees and years of service, and those taking the package would have pensions calculated with five years added to both their ages and years of service.
While such a pension may not match executive salaries, one longtime employee characterized the yearly value of the pension as "very, very nice," though the executive added, "I don't know whether they get into six figures or not."
One complication is that " a lot of old pensions are being translated" into a compensation system relying more heavily on stock," said one executive. AOL-and now AOL Time Warner-stock has been volatile during the past year, trading between $31.50 and $74.63; it closed March 30 at $40.15.
"People are trying to figure out what it all means," the executive continued. "They're not waiting for five-or-10 year results" of company stock performance, "but for two- or three-year" results.
None volunteered knowledge of how many positions the company was hoping to cut. One executive suggested that if the 50-and-15 approach garnered inadequate responses, the company may go down to a 50-and-10 approach.
Some are taking the buyout news in stride.
"There's really talented people here over the age of 50, and moderately talented ones like myself," said Dan Okrent, former managing editor of Life and a current editor at large for the company. "But there's a lot of young talent ready to run this place.
"One of the problems with Time Inc. is we tend to hang around too long after you're done doing what you're doing-I'm a classic example," he continued. "It's hard not to hang around, but it doesn't do good things for the younger talent that is ready."
Perhaps. But another executive noted that while there were buyout offers during the last major advertising downturn in the early '90s, they did not go as broadly as this round is expected to.
"We'll get through it," said that executive, but he added, "I think everyone at the company now is kind of grouchy and grumbling for a variety of different reasons.
"I don't know how I feel about this," the executive continued, citing the tension between the economy and "what I wish I could just call a takeover"-meaning the AOL Time Warner merger-"which packs a whole lot of additional presures on."
AOL Time Warner will report its first-quarter earnings April 18. While many media companies-from the New York Times Co. to Knight Ridder-have told analysts they will not meet earnings expectations, no such noise has been heard from AOL Time Warner. Asked if the cutbacks across the entire company may portend an earnings disappointment, one executive expressed confidence that wouldn't happen-to a point.
"If I were a betting man," the executive said, "I'd bet we'd probably make" earnings expectations.