Tribune Co. has asked a bankruptcy judge’s permission to implement a 2009 management bonus program for 720 employees and pay $3.1 million to nine top executives for their 2008 bonuses.
"There can be no serious debate about whether the top 10 executives have earned their 2008 [Management Incentive Plan] awards," the motion says.
The request was made in U.S. Bankruptcy Court in Delaware as part of the media company’s Chapter 11 reorganization. Tribune also asked to keep part of its motion under seal.
A Tribune spokesman declined comment Wednesday.
The proposed 2009 bonus plan already has been approved by the company's official unsecured creditors committee, its senior lender steering committee and the compensation committee of Tribune Co.'s board of directors.
Tribune Co. Chief Operating Officer Randy Michaels and Chief Administrative Officer Gerry Spector, in a note to employees, described the proposed management incentive plan as "more conservative than in past years," saying the 2009 program is in many respects consistent with the 2008 plan the bankruptcy court approved earlier this year.
In past years, falling short of goals still could mean a reduced bonus payment. The 2009 plan does not pay out unless companywide and/or business-unit operating goals are met, according to the motion. The motion does not specify what those goals are or how they compare to the company's performance in 2008 or before.
The Chicago-based media company, which in December sought protection from its creditors, wants to pay 720 managers a total of $17.5 million if the company hits certain operating cash flow targets this year, or a total of $35 million if it exceeds another threshold.
That works out to an average of $24,305 or $48,611 per qualifying employee.
The workers include the Tribune’s chief financial officer and chief operating officer and the publisher of the Los Angeles Times. Sam Zell, Tribune’s CEO, is exempt from the management bonus program, according to the court document.
The company said it needs to continue its management bonus program as “key personnel are still being called upon to surmount significant industry and macroeconomic challenges while at the same time working diligently towards a successful reorganization.”
Wednesday’s request also asked for:
An additional $3.5 million to be dispersed among a 21-member core management team if certain targets are met. That pool would grow to $7.5 million if Tribune triggers the next incentive threshold.
A discretionary bonus pool of either $500,000 or $1 million to be paid to up to 50 employees.
A $9.3-million bonus pool to pay 23 leaders of key operations if Tribune can exceed certain performance goals. A hearing on the requests is scheduled for Aug. 11.
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All of this cash is for bonus payments to management while thousands of Tribune employees have been laid off, with more staff cuts pending at Tribune newspapers and TV stations across the country.
Tribune's non-management employees whom are lucky enough to still have their jobs are being offered zero percent raises, reduced pension contributions, and cuts in benefits such as health insurance.
This action is a slap in the face to the people who produce the newspapers and keep the TV stations on the air to create the income that Tribune is distributing as bonuses to management.
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