McClatchy Co. cut 10 percent of its workforce this week, or 1,400 jobs, pointing to tumbling ad revenue, low cash flow results and poor stock performance as reasons for such drastic cost-cutting measures. It was a tough business decision made during a very difficult time for U.S. newspapers, and other newspaper companies across the country are taking many of the same measures.

Yet, when such a sweeping step is taken, especially when that step is to put loyal, hard-working employees out on the street during a time when finding a journalism job in the United States is beyond difficult, (not to mention under-paid, in many cases) it's only natural for a critical eye to be turned on management, as journalism professionals across the country and around the world wonder if such a drastic step could have been avoided. The Lexington (Kentucky) Newspaper Guild was perhaps the first to make a statement on the matter, and on Monday released a statement criticising CEO Gary Pruitt for his high salary and sizeable 2007 bonus, all while his company was suffering financially.

(McClatchy disclosed in a proxy statement that Pruitt made US$4.6 million in 2007, which includes $1.1 million in base pay, an $800,000 performance bonus and about $2 million in stock and option grants and other forms of compensation, the Sacramento Bee reported in April).

Pruitt “promised McClatchy employees in April that any future cuts would be made 'sensibly, humanely and with an eye toward the future,'” said the Newspaper Guild statement, representing the McClatchy-owned Lexington Herald-Leader. “The Guild does not believe it is humane when employees who have put in a lifetime of service to McClatchy and Knight-Ridder are thrown to the curb, while McClatchy's excessive corporate bureaucracy remains untouched. In fact, just last week McClatchy added a new corporate vice president.”

PaidContent pointed out Tuesday that Pruitt owns about 13 million McClatchy shares, which means he too, is suffering financially, as the stock price has plummeted from almost $29 to less than $8. It is also important for the company to continue to offer a competitive salary if it wants to keep an experienced CEO.

However, paidContent also notes, Pruitt oversaw McClatchy's buyout of Knight-Ridder, a “major doubling down on the decaying industry.” And although Pruitt can't be expected to predict the future and “wasn't alone in failing to grasp the extent of the industry's coming woes ... ideally the CEO should be held to a higher standard.”

Pruitt was also given the bonus because management was able to make measurable accomplishments, all while cutting costs, even though goals weren't met when it comes to cash flow results. For example, McClatchy newspapers are running many “leading” local Internet sites. But, paidContent asks, “What is a 'leading' local Internet site, anyway? Presumably that's based on some measure of relative page views, compared to other sites in the area, but if digital is so important to the future of McClatchy, why not set a real dollar benchmark as opposed to a soft goal? In an interview, Pruitt told Reuters that digital would come in 'around a couple hundred million dollars this year,' but that it would not match the decline of print for some time. That's understandable, but at that scale, the company should be able to set a target so shareholders can get a legit answer to this question: Is management succeeding in the digital arena or is it not?”

The Lexington Newspaper Guild stated that it is not sensible for Pruitt to make a bonus of $800,000, all while McClatchy, the third-largest newspaper publisher in the United States, lost 71 percent of its stock value.

“The Guild does not believe downsizing is the best approach to our future and believes McClatchy and the Herald-Leader would be more successful by strengthening core departments and improving Web sites, while seeking additional venues for its quality products,” the statement reads. “The Lexington Newspaper Guild understands that in these challenging times that change and sacrifice are necessary. But sacrifices should be made in an equitable manner and not as a short-term response to long-term financial concerns.”

At the 61st annual World Newspaper Congress in Göteborg, Sweden earlier this month, Juan Antonio Giner, founding partner and vice president of the Innovation International Media Consulting Group, told the congress that industry leaders around the world are making a fatal error in judgment: the future of the newspaper is not what is a stake – the future of journalism is.

“I am not worried about the future. I'm worried about the present. I'm not worried about the future of newspapers, I am worried about the future of journalism. This is the issue that is at stake right now. Not the newspaper, but the soul of our industry,” said Giner, also a former senior research fellow at Harvard University.

Industry experts, critics and top management “only talk in the tone of the newsroom, like they are the ones creating the problem, that they are the ones that need to change, and this is very dangerous. You start to take the position that they are wrong,” he said. This is “the thing that is out of focus right now.”

Howard Weaver, vice president of news at McClatchy, stated in his blog earlier this week that of those being laid off, “Almost all are people we wish we could keep. The numbers include colleagues with impressive resumes and long tenure who have contributed great things. In places where last-in, first-out rules apply, too many are talented minorities we have worked hard to recruit and retain. At a time of stress and challenge in adapting to new demands, online and elsewhere, moving backward on staffing is doubly painful.”

A company works hard to recruit and retain talent to push itself forward, into the future. Applying Giner's logic to McClatchy's current situation, what is the future of journalism, and thus the future of the newspaper, when a CEO gets his bonus, all while some of the talent that bonus could have paid for is shoved out the door? How will the McClatchys of the world evolve into the future when the employees with the fresh ideas and solid journalism backgrounds are sacrificed for the bottom line?