Tribune Seeks Approval for as Much as $59 Million in Management Bonuses
Tribune Co. proposed paying managers as much as $59 million in bonuses, including $22 million for top executives of the bankrupt newspaper publisher.
Tribune yesterday asked U.S. Bankruptcy Judge Kevin Carey in Wilmington, Delaware, to approve annual bonuses worth as much as $42.9 million to 640 managers at the company’s newspapers and broadcasting stations. Chicago-based Tribune previously proposed two related plans to split $16.2 million among 36 executives when it exits bankruptcy.
Some of the executives, including Chief Executive Officer Randy Michaels, are eligible for all three plans, raising their maximum potential bonuses, according to court records. About $1.3 million of their pool may be shared with 50 lower-level employees at Tribune’s discretion.
“I think it’s an extreme reward for a company whose performance is declining,” said William Salgalnik, a member of Tribune’s official creditor committee and an officer with the Washington-Baltimore Newspaper Guild.
“This is more than they paid in bonuses in the good years,” Salgalnik, a former reporter for the Baltimore Sun, a Tribune newspaper, said in an interview.
Gary Weitman, Tribune’s spokesman, declined to comment.
‘More Stringent, Conservative’
The largest of the three plans is “more stringent and conservative than historical MIP programs,” the company said in court papers yesterday, referring the company’s annual management incentive plan.
That plan is an update of the 2009 management incentive plan that Carey approved in January for 720 managers. Originally, that program included the two bonus plans for the 36 executives.
Tribune put those two proposed bonuses into its reorganization plan after Carey urged the company to separate them from the larger management incentive proposal.
The management incentive program is tied to the company’s cash flow. Managers will collect the full amount only if annual cash flow hits $635 million, according to court papers.
The top nine executives, including Michaels, would split $5.7 million of the $42.9 million if the company reaches the maximum cash flow goal.
If the company brings in $425 million, the bonus pool for the 640 managers would be $30.8 million, including $2.2 million for the nine executives.
$8 Billion in Debt
Tribune, which owns the Los Angeles Times and Chicago Tribune, filed for bankruptcy in December 2008, one year after being taken private by real-estate billionaire Sam Zell. The transaction added more than $8 billion to the company’s debt.
Some creditors blame Tribune’s bankruptcy on the buyout, saying it loaded too much debt onto the publisher at a time when newspapers and television stations were in decline.
Tribune’s 4 7/8ths percent bonds due in August fell 4.6 cents, or about 14 percent, to 29 cents on the dollar today, according to Trace, the bond-price-reporting system of the Financial Industry Regulatory Authority.
The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).