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As Yellow Media crumbled, board took home 26% raise
SEAN SILCOFF
RTGAM






While shareholders and the CEO of Yellow Media Inc. took a big financial hit in 2011, one group of the company's stakeholders fared much better: its board of directors.

A securities filing by the Montreal-based publisher of the Yellow Pages shows it paid a total of $1.74-million to its directors in 2011 - up 26 per cent from the year before.

Meanwhile, chief executive officer Marc Tellier saw his total compensation fall 90 per cent, to just below $900,000 in 2011, from $9-million in the prior year, because he failed to qualify for performance-based shares and options as the company's fortunes crumbled. Mr. Tellier earned an $825,000 salary in 2011, unchanged from the previous two years.

Directors, however, didn't suffer from lighter pockets in a year in which the company reported a $2.8-billion net loss; revenues and free cash flow declined steeply; it sold its Trader Capital division at a loss; and the stock plummeted by 97 per cent.

The basic retainer for board members in 2011 was unchanged from 2010: $110,000 for all except chairman Marc Reisch, who earned $260,000. Directors earned additional fees for participation on the board's three regular committees, while three directors - Michael Boychuk, John Gaulding and Anthony Miller - received another $110,000 combined for joining a new financing committee, responsible for deciding how the company should refinance its $1.7-billion in net debt, including $255-million in notes that mature in 2013.

On Monday, rating agency DBRS downgraded junk-level Yellow's credit rating, saying it had "made no progress in improving its liquidity position" in the first quarter.

Directors also received a combined $206,000 worth of "restricted shares," compared to none the year before.

The company's proxy circular, filed in advance of its May 8 annual meeting, shows Yellow paid consulting firm Towers Watson more than $300,000 last year, including close to $100,000 to help the company determine what to pay its top executives. The circular shows the consultant based suggested remuneration for the CEO and chief financial officer on what other Canadian companies of similar size paid their top officers. Those included Quebecor Inc. , Tim Hortons Inc. , Westjet Airlines Ltd. , Gildan Activewear Inc. , CAE Inc. and Astral Media Inc. - companies that, unlike Yellow Media, aren't suffering from steadily declining revenues in their core business.

The filing also shows that Yellow paid $1.6-million in severance to departed chief financial officer Christian Paupe.