Unions Outraged Over Bankrupt Tribune Company's $67 Million Dollar Executive Bonus Plan

Broadcast Union News
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Delaware Bankruptcy Court Judge Kevin Carey will hear arguments on August 11, 2009, in a dispute over the Tribune Co.'s request to approve executive bonuses totaling about $70 million for the company's top managers.

The Newspaper Guild unit at The Baltimore Sun has filed an objection in bankruptcy court to Tribune Company plans to award some $69.9 million in bonuses to top executives, claiming the move is unfair to rank-and-file employees.

The Guild was joined in thier objection by the Newspaper Guild of New York, which represents 29 employees at television station WPIX, International Brotherhood of Electrical Workers Local 1212, representing just under 100 staff and freelance broadcast engineers at WPIX, two Baltimore-based Teamsters locals, and NABET-CWA.

While the numbed survivors of Sam Zell's ill advised Tribune take over struggle with higher health care premiums, loss of pensions, reduced pay and work hours, those overseeing this wreckage have told the bankruptcy judge that if they don't get more executive compensation, things will get really bad.

"Incentivizing employees is essential to Tribune's future success," Tribune's chief operating officer and its chief administrative officer wrote this month to a federal bankruptcy judge, seeking the court's approval of a plan to pay up to $69.9 million in management bonuses. "We must continue motivating our people to overcome obstacles, achieve our performance goals and take the company to the next level," they explained.

The objection was filed in U.S. Bankruptcy Court in Delaware on Tuesday, according to a copy of the motion.

It states: "the proposed bonuses to top executives are excessive and may, in fact, have a detrimental effect on motivating others who contribute to the bottom line. Indeed, the payment of disproportionate bonuses to a select group of executives may have the opposite effect on the rank-and-file employees."

Bill Salganik, president of the guild unit, said in an e-mail that the company's action is unacceptable: "If Tribune has $69.9 million available to spend, we think it would be better spent on providing more and better news and service for readers and viewers and advertisers. That would not only serve the public better, but would be better for the business in the long run."

Tribune Co. contends that the incentives are based on specific performance targets and are needed to retain key employees facing significant industry challenges while working toward a successful reorganization, and to attract top-tier management talent if needed.

Tribune Co. attorneys say that compensation report needs to be kept under wraps because disclosure of compensation information and confidential business goals it contains could provide an advantage to competitors.

"Moreover, such information likely would affect employee morale and potentially create resentment among certain employees of the debtors as they compared their compensation to that of their peers, and could adversely impair the debtors' ability to negotiate and maintain favorable employment agreements in the future," Tribune Co. attorneys wrote in seeking to keep the report under seal.

Bob Daraio, former staff video engineer at WPIX said; "Tribune's assertion that incentivizing employees is essential to Tribune's future success," apparantly only applies to their already highly compensated executives and does not take in to account the damage this action will cause to the rest of Tribune's employees."

According to Andy Zipzer, editor of the Guild Reporter; "The best employees are motivated to do their best for a variety of reasons that have less to do with money and more to do with loyalty to the employer, pride in one's work, and a sense of responsibility."

Mr. Daraio concurs; " Loyalty, sacrifice, and responsibility is what Tribune management expects from the non-executive employees, how can they expect less from the corporate leadership? Handing out bonuses to the few, while cutting the pay and benefits of the rest, serves only to erode the employee loyalty and support that is vital to saving Tribune."

Tribune, which owns the Los Angeles Times, Chicago Tribune, The Baltimore Sun, The Hartford Courant and other dailies, as well as 23 TV stations, sought bankruptcy protection in December because of dwindling advertising revenues and a $13 billion debt. Much of that debt was amassed when real estate mogul Sam Zell took the Tribune Co. private in late 2007
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Hey Bob,

How come NOBODY points out this little factoid:

With the economy shrinking and job losses amassing by the hundreds of thousands every month executive choice of positions is also curtailed. Thus the argument that "we need to incentivise executives" to keep quality management is rendered invalid: if someone wishes to quit their job, they will have no other positions available therefore they will stay. If they choose to quit anyway they would not have contributed much to the well being of the company in all probability had they stayed because of a bonus.

Yeah, I know... it's not a factoid per se, but it is a relevant argument against paying extra money to the thieves that caused the problem to begin with.

Best,

Danny