Donnelley chairman steps down
Burnett says move not related to outcry over his sale of
By Jeff Smith
Rocky Mountain News
Thursday, May 4, 2006
Former Dex Media CEO George Burnett has resigned as chairman
of R.H. Donnelley, just three months after the merger of the
two telephone directory publishers. Burnett said Wednesday
his decision to resign from the board of North
Carolina-based Donnelley had little to do with being
criticized for selling nearly all of his Donnelley stock for
a profit of $21.6 million in March.
Instead, he said, he felt the merger of Dex and Donnelley
operations is well under way, the company is in good shape,
"and that it's a good time to resign, spend some time with
my family and look at other opportunities that have come my
Burnett, who is prevented by a noncompete clause from going
to work for certain rival Yellow Pages publishers for a
year, said companies from a variety of industries have
expressed an interest in him.
Donnelley confirmed Burnett will get a $1.7 million
severance, a payment owed him when Donnelley completed its
$9.4 billion acquisition of Arapahoe County-based Dex in
late January. The severance payment was deferred when
Burnett joined the Donnelly board.
Burnett, 51, sold the Donnelley stock in a three-day flurry
in late March, according to federal regulatory filings. The
sales stemmed from options he had received in 2002 and 2003
when Dex was still a private company.
A person familiar with the stock sales said at the time that
some large institutional investors had expressed their
displeasure to Donnelley about Burnett selling so much of
his holdings in such a short time.
An independent analyst said such sales by a company chairman
send a bad signal to investors.
Burnett said the sales were "pure and simple a personal
decision based on diversifying my financial holdings, the
desires of my family and the advice of my financial
advisers." He noted he has kept about 60,000 Donnelley
shares, worth more than $3 million.
"I think every investor understands that executives sell for
a variety of reasons," Burnett said. "At the end of the day,
I don't believe it had a substantive impact on the company."
He also indicated he saw his role differently because he was
a nonexecutive chairman of the board.
Burnett sold the stock at $59.14 to $59.90 a share. Since
then, Donnelley stock has declined somewhat to $56.61,
despite the fact that analysts covering the company have
either "buy" or "hold" ratings on the stock.
Donnelley Chief Executive David Swanson has been appointed
to replace Burnett as chairman of the company.
In a statement, Swanson thanked Burnett for his help in
ensuring a "smooth transition" in combining the two
Donnelley also announced Wednesday a loss of $71.7 million
for its first quarter but with strong cash flow from
operations of nearly $200 million.
+ 11 cents