The Association of U S West Retirees



Donnelley chairman steps down
Burnett says move not related to outcry over his sale of stock
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 way."

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 companies.

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.

R.H. Donnelley
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