For employees of Bloomberg LP, a megabonus deferred
The thousands of employees of Mayor Michael Bloomberg's eponymous media and finance company will have to wait longer than they thought for the megabonuses dangled in front of them two years ago, Capital has learned.
In December 2010, as the New York Post's Keith Kelly reported at the time, Bloomberg employees were told in a year-end memo that they would receive giant bonuses if the company reached $10 billion in annual revenue sometime between July 2013 and June 2014.
The bonuses, separate from the standard annual bonuses Bloomberg employees receive every February, would be more than 70 percent of the average annual salaries employees had earned from Jan. 1, 2009 through the point the company reached its goal.
As with all Bloomberg memos, the math was a little arcane, but employees quickly totted up the totals, creating a big incentive to work hard and, most importantly, stick around for the crucial moment.
But in a new memo sent to employees on Dec. 6 by Bloomberg Chairman Peter Grauer and C.E.O. Dan Doctoroff, the bad news was broken: That outcome no longer seems likely within the projected timeframe.
"Despite our best efforts, it is clear it will take us longer to reach this goal," the memo, obtained by Capital, reads in part.
In the meantime, employees will receive a more modest interim bonus in August of 2014: somewhere between 10 and 15 percent of what they will have earned on average from Jan. 1, 2009 through the end of 2014. The rest of the 70 percent will be paid whenever the company finally hits the magic $10 billion mark, for all those who are still around by then.
Bloomberg L.P. first announced in 2008 that it believed it could reach $10 billion in annual revenue by 2014. Employees of the company, which owns the Bloomberg Terminal technology, Bloomberg News and Bloomberg Businessweek magazine, receive a progress report at the end of each year.
"We could not have foreseen the market turmoil that soon followed" the 2008 announcement, last week's memo read.
Revenue for 2012 is expected to cap at $7.92 billion, up from $7.59 billion a year earlier, Grauer and Doctoroff said in the note. And new subscriptions to the Bloomberg terminal, the cornerstone of the business, have slowed down dramatically in the last year. The company is projecting a net increase of 1,250 new subscriptions for 2012; in 2011, that number was 13,763, the Post's Kelly reported in October. The terminal subscriptions cost about $20,000 a year for nearly 315,000 active subscribers around the world.
According to the memo, revenue went up by $106.59 million outside the terminal-subscription business in 2012, and total revenue for the company was up 4.4 percent, despite the slowdown.
In the shorter term, employees can also expect their regular February bonus checks to be a bit thinner than they have been in the past. Annual bonuses at Bloomberg depend on the overall financial results, and this year, the company "fell significantly short" of the revenue target upon which the bonuses are partly based; 50 percent of each employee's annual bonus is tied to company performance, with the other half hinging on individual and departmental performance.
Grauer and Doctoroff told employees that "many businesses performed well given the difficult markets" and that the bonus pool not tied to company performance has therefore "been enhanced significantly" despite company revenues having missed the mark.
The bad news reaches employees as rumors persist that Mayor Bloomberg is considering a purchase of The Financial Times, the Pearson-owned British business broadsheet.
The Financial Times is not officially up for sale and Bloomberg himself has been a bit cagey about his degree of interest in owning it. His most recent media acquisition, Businessweek, still loses money, albeit much less than it was bleeding when Bloomberg bought it in 2009. The magazine will reportedly finish 2012 about $18 million in the red, down from $62 million three years ago.
The Dec. 6 memo however described an "appetite for investment," announcing that there will be 375 new hires in 2013. There are more than 15,000 employees total at Bloomberg.