Salary Survey

The recession combined with mediocre book sales to reduce pay raises throughout the industry in 2001 compared to the previous year, PW's annual salary survey found. The average raise in 2001 was 6.7% compared to 9% in 2000. Moreover, when promotions are eliminated from the equation the average raise was 5.4% last year. Among the respondents who received a raise based on job performance only, 61% reported receiving an increase of between 3% to 5.9%, while 18% said they had an increase of 6% to 9.9%. Eleven percent of respondents reported receiving a raise of 10% or better, while 11% reported receiving a raise of less than 3%.

Industry members have low expectations about prospects for pay increases in 2002. Although 44% expect their raises in 2002 to be the same as in 2001, 22% percent are not expecting any raises, while 24% expect their raises to be lower than in 2001; 5% expect their raises to be delayed.

The survey found that the overriding factor behind the modest pay hike expectations is a tight job market. According to the survey, 10% of respondents reported that their companies have already laid off people this year or will lay off people before year-end, and 17% have had or expect a hiring freeze to be implemented. Most respondents, 48%, expect no change in personnel in the year, while 25% said they expect their company to add staff. Fewer open positions resulted in a marked decline in turnover last year. The percentage of respondents that reported turnover in the editorial department fell to 13% last year from 18% in 2000, while turnover in sales and marketing dropped from 20% to 11%. Six percent of respondents reported turnover in management ranks last year compared to 10% in 2000, and turnover fell to 8% from 16% in operations. The reduction in turnover coincides with another finding of the survey: people who expect to be at the same job in two years rose to 72% of respondents, up from 67% in 2000.

The tight job market is due in part to what respondents see as slow industry growth. According to the survey, 47% of respondents believe that book publishing is a mature industry that will produce only modest sales gains, while 19% believe that the industry is shrinking. Only 29% think the industry is growing. Employees at the largest companies were the most circumspect about the industry's prospects, with 56% believing the industry is mature and 21% believing the industry is shrinking.

The most pessimistic about their jobs are those at the lowest pay levels. Only 35% of respondents earning less than $40,000 said they were extremely or very satisfied with their jobs. Satisfaction levels increased in step with higher salaries: 63% earning $40,000 to $79,999 reported high satisfaction levels, as did 65% in the $80,000 to $109,999 range and 70% earning more than $110,000.

Breaking into publishing did not get any easier last year, especially at the largest companies where 25% of respondents said they hired fewer entry level staff in 2001 than in 2000. The best way to get a foot in the door is at the smallest publishers where 28% of respondents said the number of entry level positions increased in the year.

Managers were the best paid industry employees in 2001. From the smallest publishing houses to the largest, the highest net average salary was for those in management. At companies with revenues over $500 million, for example, the average net salary for management was $252,194, compared to $94,166 for those in editorial and $85,640 for sales and marketing employees. At companies with revenues below $10 million, those in management positions earned an average of $112,793, compared to $70,612 for editorial personnel and $56,190 for sales and marketing.

Men continued to out-earn women in 2001, with men earning an average of $112,399 and women taking home $75,464. The difference in pay is partially due to male respondents having five years more experience than women (18 vs. 13) and because men tend to be found more in management roles (36%), while women gravitate to editorial (34%).

Executive Compensation

An increase in sales and reduction in losses were enough to bump up the take-home pay for Barnes & Noble.com acting CEO Steve Riggio and CFO Marie Toulantis in 2001. Riggio's compensation rose 37.8% to $662,5000, due mainly to a $162,5000 bonus; Toulantis's salary remained at $350,000 last year, but she earned a $113,750 bonus in 2001 compared to no bonus in 2000. At the beginning of 2002, Riggio moved to Barnes & Noble as CEO, and Toulantis was promoted to CEO of the e-retailer.

Improved financial results at Amazon.com did not translate into higher annual compensation for two of the e-retailer's top executives. Compensation for Warren Jenson, senior v-p and CFO (who is leaving the company to join Electronic Arts), and Diego Piacentini, senior v-p, worldwide retail and marketing, fell 11.6% and 28.4%, respectively, last year. However, most of the men's pay is tied to bonuses, including signing bonuses, that are being paid out over several years. Jenson's base salary rose to $178,675 in 2001 from $177,450 in 2000, and Piacentini's salary increased to $175,000 from $150,694. CEO Jeff Bezos received no bonus in 2001 and his salary stayed at $81,840. He does own 111.7 million Amazon shares that were worth $1.8 billion as of June 28.

In the bricks-and-mortar bookselling world, Borders Group chairman, president and CEO Greg Josefowicz's monetary compensation jumped 76.7% to more than $1 million last year. His base salary increased $25,500 to $675,500 and he earned a $473,200 bonus in the year. Tami Heim, president of Borders Stores and Borders Online, had a 10.2% salary increase to $264,519 and her bonus rose 121% to $132,500. Her total pay was slightly higher than that of Ron Staffieri, president of Waldenbooks Stores, whose bonus was $2,500 less than Heim's. Net income at Borders doubled in the year, although income from continuing operations was up only 18%.

Books-A-Million's earnings rose 30% last year and the annual compensation for chairman Clyde Anderson and president Sandra Cochran increased 46.2% and 66.2%, respectively. Anderson's salary remained at $400,000, but his bonus increased to $280,000 from $65,000, while Cochran's salary increased by $30,000 to $330,000 and her bonus rose to $231,000 from $37,500.

A combination of no salary increase plus a reduction in bonuses dropped the annual compensation for the top executives at Barnes & Noble. Company COO Alan Kahn's salary remained at $600,000 in 2001 and his bonus fell from $360,000 in 2000 to $270,000 last year, while Mitchell Klipper, executive v-p and president of Barnes & Noble Development Corp., had his salary frozen at $500,000 and his bonus cut by $75,000 to $225,000. The same figures applied to B&N chairman Len Riggio last year, although Riggio owns 14.7 million shares of B&N stock. Klipper and Kahn own just over one million and 531,455 shares of stock, respectively. Effective February 1, 2002 Kahn took over as president of the Barnes & Noble publishing group and Klipper became COO.

At the publishing houses, most executives took home less in 2001 than in 2000. Reader's Digest chairman and CEO Thomas O. Ryder took the biggest hit. Ryder received no bonus for the fiscal year ended June 30, 2001, compared to a $1,560,000 bonus in the previous fiscal year, more than offsetting a $42,307 salary increase in fiscal 2001. John Bohane, senior v-p and president, international and global publishing, also received no bonus in fiscal 2001, while his salary rose $10,000. Earnings at RD fell 9% in fiscal 2001, and it is unlikely bonuses will be handed out in fiscal 2002, as the company copes with another difficult year with net income down 39% through the first three quarters.

Significantly smaller bonuses and relatively minor raises cut into the take-home pay for McGraw-Hill Cos. chairman and CEO Terry McGraw and executive v-p and general counsel Ken Vittor. McGraw's compensation fell 29.2% last year and Vittor's dropped 24.2%. Net income fell 6% in the year.

A strong fiscal year ended April 30, 2002, should help reverse the fortunes of executives at John Wiley & Sons, who had a cut in pay the previous year due to slower earnings growth in fiscal 2001 compared to fiscal 2000. An off year by the professional/trade group resulted in the reduction of group head Stephen Kippur's bonus from $311,555 in fiscal 2000 to $69,943 in fiscal 2001, although his salary went up to $345,577 from $324,692. Company CEO Will Pesce's bonus fell 24% to $437,989 in fiscal 2001, while his salary increased to $546,538 from $483,846.

Slightly slower growth at Scholastic in the fiscal year ended May 31, 2001, compared to the previous year reduced the bonuses for the top executives at Scholastic Corp. Company chairman, president and CEO Dick Robinson's bonus was cut by 23% to $562,000, although his salary increased by $31,731 to $731,731. Children's book publishing group head Barbara Marcus's bonus dropped to $460,525 from $540,000 in fiscal 2000, offsetting a 10% salary hike to $629,224.

A net loss of $2.8 million in the fiscal year ended March 31, 2001, kept Thomas Nelson president and CEO Sam Moore's salary at $400,000 in the year with no bonus. Moore owned 2.1 million Nelson shares at the end of the last fiscal year. Executive v-p, secretary and treasurer Joe Powers's salary remained at $210,000 in fiscal 2001 and he received no bonus compared to a $30,000 bonus the previous year.

An 87% decline in net income for the fiscal year ended July 31, 2001, did not help compensation for Millbrook Press executives. David Allen, executive v-p, COO, CFO and secretary (and now president) had his take-home pay fall 4.2% to $161,000, due to no bonus in the year compared to a $15,000 bonus in fiscal 2000. Jean Reynolds, executive v-p and publisher, also received no bonus in fiscal 2001, but her salary rose to $145,000 from $137,500. Dick McCullough, head of sales and marketing, was the only Millbrook executive to receive a bonus last year, $20,000, which increased his cash compensation in the year to $149,000 from $145,000.

Despite a good year, Educational Development Corp.'s chairman, president and treasurer Randall White received a salary of $110,000 and a $20,000 bonus, the same amounts he has received for three years. White owns 819,391 shares of EDC and beginning June 1 the company implemented it first employee stock option plan. EDC has allocated up to one million shares for the plan, for which eight EDC employees are eligible to receive options.

A dramatic reduction in the net loss at MediaBay in 2001 helped to boost the cash compensation for executives Michael Herrick and John Levy. Herrick's bonus stayed at $50,000, but his salary rose to $175,000 from $154,167, while Levy's salary increased from $167,027 to $180,000 and his bonus went up $2,500 to $17,500. The Herrick family controls 32% of MediaBay's stock, with Michael Herrick owning nearly 1.5 million shares.

At Audible Inc., the struggles of the start-up were reflected in the pay packages of its top executives. Chairman Don Katz's 2001 compensation fell due to a cut in salary and no bonus. CFO Andrew Kaplan's salary/bonus fell 30.8% in the year, to $181,396, although he received another $100,000 has part of an incentive to stay with the company through June 30, 2001.

The Publishing Payscale

Editorial

Management

Sales & Marketing

Operations/Rights

Selected Executive Salaries, 2000—2001