For the past couple of years, I’ve chronicled a barrage of Star Tribune cuts — jobs obliterated, wages cut, pensions frozen. So when management unilaterally decides to increase compensation, it’s news.
In a memo to employees last week, new publisher Mike Klingensmith announced the resumption of a 401(k) match. Beginning July 1, the company will match 25 percent of what an employee puts away, up to 6 percent of salary, with the carrot of another 25 percent “if we achieve our financial objectives for 2010.”
Klingensmith sounds bullish on that second 25 percent: “Although it is still early in the year, we do expect to make all or a portion of the discretionary match for 2010. … While we are still operating in a difficult business climate, our financial situation is improving, and offering a 401(k) match was a top priority as we balance keeping our pay and benefit programs competitive while keeping our overall financial picture in good order.”
For a senior-level reporter making $72,000 who can squirrel away the max amount, the guaranteed match would hit $1,080 annually, plus $1,080 if the paper hits profitability goals. That 3 percent bump is far less than the combined effect of recent pay cuts and pension freezes, but this is dough management didn’t have to spend, and reactions from employees I spoke with ranged from grudgingly appreciative to downright pleased.
“It’s really good news,” said theater writer Graydon Royce, who was co-chair of the newsroom’s Newspaper Guild when the cuts cascaded down. “It’s the first positive thing we’ve seen for some time.”
To Royce and others, the move may signal a tightening labor market, or at least that senior management and the board have retention concerns. Even though there are thousands of journalists looking for work, the Strib would rather not lose another valued staffer such as business reporter Liz Fedor, who resigned in January to work for the nonprofit Bremer Foundation. “They’re doing this to stay competitive with places that have retirement plans,” Royce says.
The match applies company-wide, though the newsroom will be getting it for the first time, part of last year’s pension-freeze deal. Royce says the company, which exited bankruptcy earlier this year, has also reinstated tuition reimbursement cut in 2009.
Here’s the memo:
New 401(k) Match Starting July 1
As you know, due to extraordinary financial difficulties in 2009 the company made many changes to its retirement plans, including discontinuing the 401(k) match.
I am very pleased to announce that, on the recommendation of our senior management team, the Star Tribune will introduce a new 401(k) match beginning July 1. The match will have two components: a basic company match plus a discretionary company match if we achieve our financial objectives for 2010.
The company will provide a basic match of 25 percent of employee 401(k) contributions on up to 6 percent of an employee’s pay, for eligible union and nonunion participants in the 401(k) plan.
The discretionary match could provide up to another 25 percent match of employee contributions. The discretionary match will also only apply to the first 6 percent of your pay that you contribute to the plan, like the basic match. Although it is still early in the year, if current trends continue, we do expect to make all or a portion of the discretionary match for 2010.
This new plan will be called the Star Tribune 401(k) Retirement Savings Plan. In the coming months, the Human Resources Department will work with Fidelity to send out communications and arrange meetings to fully explain all the details.
While we are still operating in a difficult business climate, our financial situation is improving, and offering a 401(k) match was a top priority as we balance keeping our pay and benefit programs competitive while also keeping our overall financial picture in good order.
Clearly, all the sacrifices you have made over the past couple of years have made a huge difference in moving us back toward financial health, and there are positive signs that business conditions may continue to improve. We will keep evaluating our compensation and benefits as market conditions change and as our new strategies begin to take hold.