Dow Jones Employees Distressed by Derailment From Their Retirement Fund

Memo to Mark Golin: Always remember, never ask your new boss, Condé Nast chairman S.I. Newhouse Jr., for a raise in the pages of the New York Post –especially when your main competitor is being touted as a genius for beating your circulation and advertising numbers.

According to sources at Details , the Condé Nast young men’s magazine currently undergoing some growing pains, it was just such a faux pas that led to editor in chief Michael Caruso’s abrupt exit on Feb. 1. When the Post printed longstanding rumors that Mr. Caruso’s job was in jeopardy on Jan. 27, he responded with typical brio: “My numbers are so good, they are going to be giving me a big fat raise.”

But after the article appeared, sources at Details said, Mr. Caruso demanded a meeting with Condé Nast president Steve Florio and editorial director James Truman on Feb. 1 to find out where he stood. With a few days to think, Mr. Truman called Maxim editor in chief Mark Golin, who had more than doubled his avowedly adolescent magazine’s circulation in his year at the helm. They met. Mr. Golin told Off the Record that Mr. Truman “was wearing a lovely dress. It was lavender. I was wearing red. Formal. A bit dressy for the afternoon.” Mr. Truman offered him the job, a big raise (a Condé Nast source put the salary at more than $600,000), and a car and driver.

Mr. Golin accepted. And just as Mr. Caruso was getting the bad news on Feb. 1, Mr. Golin marched into the office of Steve Colvin, president of Dennis Publishing in the United States, and broke the news. Then he told his staff. They weren’t expecting it. “But people by law aren’t allowed to cry at Maxim ,” Mr. Golin said, keeping up the shtick. “In lieu of tears, I got, ‘Traitor,’ ‘Asshole,’ punches on the arm.”

Things had not fared so well for Mr. Caruso. He returned from his superior’s offices at 350 Madison Avenue at about 1 P.M., “clearly not happy,” said one member of the Details staff. He soon called a meeting in the art department and announced: “The good news is, I get to keep the jukebox,” referring to the Wurlitzer reproduction in his office. According to one witness, he expressed utter surprise at being let go. (Mr. Caruso did not return a call for comment.) “I said this to them, and I’m saying this to you, I don’t understand why,” he reportedly told the staff. “I’ve done everything you’ve asked all along. And since we made this change, the two covers that we’ve had have had huge increases. You told me it was about the newsstand and the newsstand was up 40 percent.”

Of course, the changes that worked–pushing the fashion to the back, pumping up the “service well,” scaling down music coverage, adding a babe-of-the-month to the front of the book, not to mention such innovations as January’s “First Annual Lingerie Issue” and February’s lesbian appreciation pages–were responses to, if not imitations of, Maxim . And the move to grab Mr. Golin marks Condé Nast’s new, imitative strategy of checkbook editorial innovation, evidence of which includes swiping Bonnie Fuller from Hearst to Cosmopolitan -ize Glamour and giving a faltering Allure an InStyle -like makeover. “The problem with stealing the competition’s leadership is that they usually continue publishing,” noted one skeptical Condé Nast executive.

On the other hand, if you’re going to imitate, you might as well do it right. If the Maxim -ized Details seemed a bit like a forced march, that’s because it was. In his two years at the magazine, Mr. Caruso presided over an editorial exodus of sorts–four editors (including Joe Levy, Mark Healy and Danielle Mattoon, who all decamped to Rolling Stone ), one creative director (William Mullen) and a number of big-name contributing writers (Rob Sheffield to Rolling Stone , Mim Udovitch to Esquire ).

Before taking over Details , Mr. Caruso served as senior articles editor at Vanity Fair in the early 90′s and as editor in chief of Los Angeles from 1995 to 1997. According to people who have worked with him, he clearly didn’t want to be editing something so lowbrow. “He wanted to be an editor at a Condé Nast magazine,” said one Details editor. “I don’t think he ever really wanted to edit Details .” (Mr. Caruso still has a year to go on his Condé Nast contract.)

For all his success, Mr. Golin didn’t really want to edit Maxim forever. ” Maxim is fun,” he said. “Do I want to do it for the rest of my life? No.… Details presents some challenges. It allows me to go into some areas that have more depth.” So how does this short, pudgy, balding outsider who toiled in relative obscurity at Rodale Press and Cosmopolitan , and used to joke about the plush world of Condé Nast, feel about being one of Them now? “What is it that Pogo said?” he asked. “We have met the enemy, and he is us.”

With another week to go before Maxim ‘s April issue closes, not to mention three months left on his contract that he has to negotiate his way out of, Mr. Golin has already thrown himself in with his new crowd. He showed up at Details downtown offices with Mr. Newhouse and Mr. Truman on Feb. 2 to meet the skittish staff, and broke the ice by making jokes about “how he’s looking forward to crushing Maxim ,” said one editor. Mr. Newhouse even got in the act, joking that Mr. Golin “is the first editor in Condé Nast over whom I tower.”

Mr. Golin went on to articulate his vision for the magazine, which, according to one editor present, the staff found reassuring after the veering leadership of both Mr. Caruso and Joe Dolce, his predecessor. After years of trial and error, they have someone who doesn’t seem to be waiting for meddling high-concept instructions from his superiors. Mr. Golin is expected to make it funnier and less pop-culture groovy. It’s not clear how the boot-camp atmosphere of Maxim is going to translate over at 4 Times Square. But he’s willing to adapt. “I have a thing for titanium,” he said, referring to the titanium cafeteria Condé Nast is attempting to install in the new building. “I have a titanium bed.”

So when is he going to kiss and make up with GQ editor in chief Art Cooper, whose magazine he has slammed in the past? “I’ll just wait and kiss him in person,” said Mr. Golin.

Dow Jones & Company chairman and Wall Street Journal publisher Peter Kann made a particularly bleak entry into his employees’ daily diary of the American dream on Jan. 28 when he announced the end of the company’s rather generous, 50-year-old profit-sharing program. The reason? The company’s run out of profits to share.

Dow Jones’ lack of profits stems from several well-publicized management blunders, including a billion-dollar write-down the company took on Telerate, a failed Bloomberg-style business information system, in 1997. Under the profit-sharing plan, started in 1949, Dow Jones took the equivalent of approximately 15 percent of each employee’s salary out of its own profits and funneled that back into individual retirement funds. As Mr. Kann, a former reporter and editor at The Journal , pointed out to his employees in the Jan. 28 memo, profits were so healthy in the 1980′s–before the recession and the purchase of Telerate–the company socked away a “surplus” for the plan. Mr. Kann noted, however, that “after 1989, when the company’s earnings were less robust,” that surplus was used to keep the payout at 15 percent.

That money ran out in 1997 when Dow Jones took the Telerate hit–the first year the company recorded a loss since going public in 1963. Dow Jones made the full contribution, anyway, Mr. Kann wrote, “particularly in light of the fact that the loss was entirely attributable to Telerate … and that most of the rest of Dow Jones (including The Wall Street Journal ) had its best year ever financially.” The plan was also written into the last three-year contract that the company negotiated with the Journal union, which expires April 30.

Wall Street Journal reporters and editors, proud of their heady journalistic position and used to covering the great movements of global capitalism, were caught by surprise and left feeling alienated from their labor, reduced to sending around a petition to their boss begging for a fair shake. The profit-sharing plan, no matter what the state of the company’s profits (or lack thereof), had come to be expected.

“The profit-sharing plan was established in 1949, so it’s basically forever,” said Lisa Kaplan, the staff organizer for the formerly docile in-house union, the Independent Association of Publishers’ Employees. ( Journal workers voted to affiliate with the Communications Workers of America in 1997 after the 1996 negotiations.) “People have taken it for granted. The mechanics for it were never explained. And the 15 percent level of contribution was taken as a given when the paper was making new hires.”

Needless to say, Journal employees aren’t happy. Many direct their ire at Dow Jones chief financial officer Jerry Bailey, who was brought in from Salomon Brothers Inc. last April to straighten out the company’s financial woes. Mr. Bailey uses management theory euphemisms like “process redesign” to explain such painful business decisions. (According to an article in Editor & Publisher magazine, Mr. Bailey recently explained “process redesign” at a Paine Webber Inc. media conference as a way to streamline a company, though “not just … a disguised form of layoffs.”)

“We don’t get bonuses and aren’t paid overtime,” said one reporter. “You can take a loan against it, use it for collateral. You can do a lot with it. This is what we retire on.”

“It’s the equivalent of saying we’re going to cut your salary 15 percent,” said another reporter, who noted that in addition to being a recruitment and retention tool (you have to be there three years before you’re invested in it), it makes up for the somewhat lower salaries The Journal pays compared to The Washington Post and The New York Times .

Telerate isn’t the only venture Dow Jones has bungled recently. On Jan. 26, managment made another happy announcement. “As part of the company-wide process redesign effort,” a memo stated, the Global News Management System, which replaced Xywrite as the word processing system at the paper last year, was getting dumped overboard at a cost of $17.3 million. Executive editor Paul Steiger noted that the editorial staff’s “patience, goodwill and good humor will be necessary.”

That may be difficult under the current circumstances, especially with a new–and potentially contentious–contract negotiation coming up.

“Nobody ever said, either by the formula that was inside of it or by the way that it was done, that it would go on forever,” said Dow Jones spokesman Richard Tofel, referring to the old profit-sharing plan. “Does the company acknowledge that they have an obligation to help its employees with retirement? Yes. Will our pay packages remain competitive? Yes.” Mr. Tofel pointed to a memo sent around on Sept. 15, which warned the employees that “over the longer term, the profit-sharing plan should be replaced with a more modern retirement plan.”

“It’s a misnomer to call it a profit-sharing plan,” Mr. Tofel went on. “In 1997, there were no profits. In 1998, if you used the plan formulas, you would have gotten to 1.8 percent … still better than The New York Times , but still not adequate to help people retire.” He denied that this had anything to do with Telerate or other recent management decisions gone sour. “I don’t see how you can even connect the dots,” he said. “In fact, exactly the reverse is true. Because of how well the paper is doing, we made the contribution, anyway.” As for the future of the company, Mr. Tofel said, “Telerate is gone. The company’s fortunes are on the rise. All of the analysts say so.” Mr. Kann was traveling and not available for comment.

Meanwhile, amid staff jokes about leaving 15 percent early and working 15 percent less, the grousing has begun. “They think it’s the be-all and end-all to work at The Wall Street Journal ,” said one reporter. But “we have to feed our family, send our kids to school. [The employment package] is really not that competitive when you look at other media. Especially these days, when there is so much competition and so many outlets.”

Another reporter put it in more prosaic terms. “We’re living our lead anecdotes,” she said.

Vanity Fair deputy editor George Hodgman, whom editor Graydon Carter plucked from the less fabulous world of book publishing six years ago to help make that fat glossy hum with something besides just celebrity awe, seems to be having a bit of a midlife crisis. He gave four weeks’ notice on Jan. 25, the week of his 40th birthday, saying he was “burnt out” and wanted time to write. He will probably continue as a contributing editor. “Graydon understands … that things change when you’re 40,” said Mr. Hodgman, who edits Gail Sheehy, Kim Masters, Peter Biskind and Buzz Bissinger. “A magazine is not a substitute for a life,” Mr. Hodgman said.