Yellow Pages publisher R.H. Donnelley
has approved a two-part “retention program” for CEO Dave Swanson meant
to reward the chief executive for staying at the company as it tries to
battle back from recent troubles.

Documents filed with the Securities and Exchange Commission outline
the program at R.H. Donnelley (NYSE: RHD), which has headquarters in
Cary.

In a nutshell, the plan’s two prongs are as follows:

• Swanson will receive 300,000 restricted stock
  units. Each unit represents the right to receive one share of R.H.
  Donnelley stock in the future. Half of the stock units will vest when
  Swanson turns 55, with the remaining units vesting in equal amounts
  over the following three years. Swanson will actually receive the units
  six months after he retires or when he turns 58, whichever comes later.
  The value of the units will depend on Donnelley’s stock price.


• R.H.
  Donnelley also will set up what’s essentially an extra pension plan for
  Swanson. Money will be placed into the pension as a lump sum either six
  months after Swanson retires or when he turns 60 – whichever happens
  later. The amount to be placed in the pension will be whatever’s
  required to make all of Swanson’s R.H. Donnelley retirement plans worth
  $500,000 per year, assuming that he retires at age 60. The money vests
  on the same schedule as his restricted stock units.

Swanson, who’s currently 53, has been with R.H. Donnelley since 1985 and has been CEO since 2002.

His tenure has been rough in the past 12 months. The economic
downturn has eaten into Donnelley’s core business of selling print
advertising, and investors have been frightened by increased online
competition and the company’s high debt load. R.H. Donnelley’s stock
price has fallen more than 97 percent in the past 12 months, closing
Monday at $1.97 per share.

As a result, Donnelley has moved to base its executives’ pay more on
performance. Earlier this year, top company officials received “stock
appreciation rights” that will be worth money only if Donnelley’s stock
rises. And because of the restricted stock units, Swanson’s retention
plan is also an “at risk” deal that will be worth more if the company
performs better.

But R.H. Donnelley has publicly backed its top officials, including
Swanson, saying their experience will make them valuable for any
turnaround of the company.

In an e-mail, company spokesperson Mike Truell says the retention
program helps bring Swanson’s total compensation more in line with the
executives in his peer group.

“We strive to provide compensation opportunities that are
competitive in the market for our leadership talent, based upon
appropriate evaluation of the marketplace, as well as the individual's
position, responsibilities and results achieved,” Truell wrote.