‘Merger of equals’ doesn’t include top Dex One executives

dranii@newsobserver.comMarch 20, 2013 

Although the merger of yellow pages publishers Dex One and SuperMedia was billed as a merger of equals, the top executive suites of the merged company will be occupied by current SuperMedia executives.

In a letter distributed to employees of both companies on Tuesday that was obtained by The News & Observer, SuperMedia CEO Peter McDonald named the half-dozen executives who will run the combined business in addition to himself and Samuel “Dee” Jones, currently chief financial officer at SuperMedia who previously was named CFO of the merged business.

All six executives named by McDonald to head the sales, operations, marketing and strategy, technology, legal and human resources departments are current SuperMedia executives. Their new titles have yet to be determined.

Andrew Shane, a spokesman for Dallas-based SuperMedia, said it’s misleading to focus on the SuperMedia pedigree of the eight-member executive team because three of them previously worked at Dex headquarters in Cary before moving to SuperMedia. That includes McDonald, who was president and chief operating officer of what is now Dex from 2004 to 2008.

Shane also said there were Dex executives who took themselves out of the running for positions at the combined company “for personal reasons,” but declined to provide further details. It’s unclear whether top executives would have needed to move to Dallas, which previously was designated headquarters for the combined company, if they continued with the business post-merger.

The merger is expected to be completed in 30 to 45 days. When the merger was unveiled in August, it was announced that Dex CEO Alfred Mockett would step down after the deal closes. At the same time, Dex’s chairman, Alan Schultz, was designated chairman of the board of the combined businesses. Dex shareholders will own 60 percent of the combined business.

The other Dex alumni named to top executive posts at the combined business are Del Humenik, who will head sales, and Deb Ryan, who will head human resources. Humenik previously was a senior vice president and general manager at what is now Dex; Ryan was vice president of franchise development at Dex when she left the company in 2011.

Humenik and Ryan joined SuperMedia after McDonald moved to the company. At SuperMedia headquarters at the time “the thinking was, ‘my gosh, this is Dex. We’re turning into Dex,’” Shane said.

This week’s naming of executives for the combined company is a sign of confidence that the merger will go through as planned. This week both companies filed “prepackaged” bankruptcy plans in order to move ahead with their merger, which calls for restructuring their debt by pushing out the date it must be repaid by two years to 2016. Both companies are continuing to operate.

Dex and SuperMedia filed for bankruptcy after failing to win the support of 100 percent of its lenders for the restructuring. The threshold for winning the support of lenders in bankruptcy isn’t as high, and the companies said that “a substantial majority” of their lenders were in favor of filing for bankruptcy in order to seal the deal.

Both companies have been buffeted by the recession and the widespread switch from print to digital advertising. They’ve been beefing up their digital advertising revenue, but it hasn’t been growing fast enough to compensate for their declining print business. Dex publishes more than 800 directories.

Ken Clark, publisher of an online yellow pages industry newsletter called YP Talk, speculated business strategy may have played a role in the selection of top executives.

“Dex was headed towards building a culture that was very digital-centric,” Clark said. “I think Peter tends to be a little bit stronger believer that print is going to be around for a little bit longer. So perhaps he is making selections that are going to allow him to have a balanced product set until things gravitate more and more to the digital side.”

Dex spokesman Tyler Gronbach declined to address the new appointments, but he did say: “This is a transaction that benefits all stakeholders. We are very proud of the accomplishments made in the past two-and-a-half years under Alfred’s leadership. We certainly understand that when you merge two businesses, you don’t need two sets of executives for the future.”

McDonald’s letter also listed 45 executives who were named to the senior leadership team of the combined company, the next rung down from the top executives who will head the company’s various departments. Of those, 21 were from Dex and 24 from SuperMedia.

Shane pointed to that close-to-even-split between Dex and SuperMedia executives as a sign of even-handedness in the selection process. More senior leaders will be named going forward.

McDonald told employees in his letter that the executive appointments had been approved by a joint committee of Dex and SuperMedia board members. Shane said “every executive from both sides” was interviewed.

Today Dex has about 225 workers in the Triangle, down from 300 when the merger was announced in August, mostly due to attrition. Companywide, Dex gas about 2,200 workers, down from 2,600 in August.

Shane said that it’s unclear whether layoffs will figure into the combined company’s plans to realize $150 million to $175 million in savings from the merger.

“I don’t know what the outlook is going to be,” he said. “It’s going to be dependent on a number of factors.”

Ranii: 919-829-4877

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