Citing significant financial pressure, glossy publisher Conde Nast said Monday that it will cut salaries for its highest-paid employees, reduce hours for others and explore cost cutting across its global footprint, according to a memo to staff by CEO Roger Lynch obtained by Deadline.
The memo (read it in full below) said the company plans to seek government assistance in Britain and the European Union.
Advertising is plunging as the coronavirus pandemic pulls the global economy to a standstill. Print advertising, already suffering and never recovered from the great recession in 2008-2009, is seen taking the worst hit this time around as well.
“It’s very likely our advertising clients, consumers, and therefore our company, will be operating under significant financial pressure for some time,” Lynch said. “As a result, we’ll need to go beyond the initial cost-savings measures we put in place to protect our business for the long term.”
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Those earning $100,000 or more will have their salaries reduced by 10% to 20% for five months starting in May. Executives in the senior management team will have their pay cut by 20%. Lynch said he would forgo half of his salary.
Board members who are not employees of Conde Nast parent company Advance Publications will also see a 50% reduction in their compensation.
Lynch said he anticipates layoffs but didn’t elaborate. “While we consider it a last option, we do expect there will be some role eliminations as part of these efforts,” he said.
“We aren’t alone in needing to take actions like this,” Lynch said in the memo. “Companies around the world are all facing similar challenges and responding accordingly. But that doesn’t make this process any easier.”
Here’s the memo:
To our Condé Nast team,
For those of you who celebrated the recent Passover or Easter holidays, and for those who may still be out today, I hope you’ve had the opportunity to spend time with your families and loved ones – whether virtually, or in person. While we’re working from home, we still need to take time to recharge.
As I’ve shared in my recent emails, we’ve been working to assess the impact of the COVID-19 crisis on our business and to reset our financial plan for the year. That work has involved modeling several different scenarios. While we aren’t as solely dependent on print and digital display advertising as some of our competitors, globally, we will still see a substantial impact from this crisis on our business. The ELT and I recognize it’s very likely our advertising clients, consumers, and therefore our company, will be operating under significant financial pressure for some time. As a result, we’ll need to go beyond the initial cost savings measures we put in place to protect our business for the long term.
Today, I’m outlining some additional actions we’re taking to balance the needs of our people and our company, as our people are the most important part of our company. I recognize these are extremely challenging times both personally and professionally, and that any amount of added uncertainty is stressful. As a leadership team, we’ve continued to work to do everything possible to protect jobs, limit impact to lower wage earners, and continue to provide benefits to individuals and their families through this time. Here’s an overview of what you can expect at the global level:
Temporary salary reductions: To start, we’re implementing temporary salary reductions for all those who earn a base salary of at least $100K USD (or equivalent). This action will start at the top. I will take a 50% reduction of my base salary, as will the external members of our board. The rest of the ELT will reduce their base salaries by 20%. For those who make $100K or above, reductions will range from 10-20% of base salary, depending on compensation level. These changes will go into effect on May 1 and will last for a period of five months, through the end of September. Our People/HR teams globally will work to implement these adjustments according to local employment laws and regulations, updating agreements and working with union representatives as needed.
Furloughs and reduced working schedules: We will also work to implement reduced working hours and work week schedules (e.g. three to four-day work weeks) for certain roles, in particular where government programs and stimulus packages can help supplement employees’ earnings. These decisions will be made locally in markets in accordance with available government programs. Along with the salary reductions noted above, these are actions that will help us preserve jobs and benefits.
Potential job and role eliminations: Many of you have been asking whether there will be any job eliminations. While we consider it a last option, we do expect there will be some role eliminations as part of these efforts. We’ve already closed several hundred open positions and limited hiring only to the most critical roles. Role eliminations are never something we take lightly, and we’ll continue to work to limit this as much as possible.
Project deferrals: Beyond the employment measures outlined above, we’re also deferring several projects to reduce workloads on teams, and to focus us on immediate priorities. Some examples of global projects that have been deferred or reprioritized for now include: our further Workday implementation for Finance and HR; the on-boarding of additional markets onto Copilot this year; the further outfitting of global internal events spaces; and, the global employee intranet – all of which will be deferred to 2021.
Local leaders will follow up in the coming days and weeks to communicate specific actions in your markets and teams. We want to act swiftly and thoughtfully, so this process isn’t dragged out. While we’ll always have the need to make adjustments to our organizational structure and team to optimize our business, we expect to complete communications related to these actions by the end of May.
We aren’t alone in needing to take actions like this – companies around the world are all facing similar challenges and responding accordingly. But that doesn’t make this process any easier. I understand the impact this will have on many of our team members, and I appreciate all of you who will join me in taking temporary salary reductions, so we can limit that impact as much as possible.
Over the past few months, I’ve said repeatedly how proud I am of this team. That is even more true today, as we embark together on these actions in an effort to protect our business for the long term. Our efforts to diversify our business model and grow consumer revenue are helping us weather this challenging time, and we must continue to focus and adapt our business in that direction. I know you will have questions about today’s announcements. The ELT and I are standing by ready to answer them. We may not have all the answers today, but we’ll do our best to provide as much information and clarity as possible.
Thank you for your support during this critical time for our business. I wish you and your loved ones good health, and look forward to the day when we can meet again in person.
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