Judge Kevin Carey approved $45.6 million in bonuses for some 700 Tribune Company executives today (Jan 27) in federal bankruptcy court in Wilmington.
However, the judge took no action on two other components of the bonus program which would have meant more than $20 million more in bonuses for top corporate management.
Supported by other unions and the U.S. Trustee, the Washington-Baltimore Newspaper Guild (WBNG) objected to the proposed bonuses. Tribune, currently undergoing reorganization through a Chapter 11 bankruptcy process, has about $13 billion in debt.
The following statement was issued by M. William Salganik, past president of WBNG and its representative to the Tribune credtiors' committee.
We're disappointed that the judge has approved the first level of bonuses. Tribune is paying out the largest amount ever through this bonus - more than triple the amount it paid for 2008.
At the same time, operating cash flow is the lowest since the program started in 1997 - down more than one-third from 2008. We think it is too generous for the circumstances this year, and we believe that cash should be conserved to pay creditors and to invest in the business.
However, we're pleased that the judge has not approved the remaining two levels of extra payouts to top executives, which are much more generous than the "regular" bonuses.
We're glad that the objections by the Guild and other unions, and by the United States Trustee, has led the judge to give this bonus program such scrutiny.
We believe these bonuses are excessive for Tribune at this time. We hope the judge ultimately agrees.
Not just for Tribune, as it tries to emerge from bankruptcy, but for the economy as a whole, it's important to examine the role that executive bonuses should play.
The Guild believes companies that use an executive bonus program need to make sure it is truly tied to performance, and that the program provides the proper set of incentives.
In Tribune's case, the program rewards cash flow, not revenue, and the executives exceeded their targets through an aggressive program of shrinking the products and the workforce. We don't believe this is a good long-term business plan.
Finally, although Tribune says its executives wouldn't be motivated to work hard without bonuses, we think more highly of our bosses. While we sometimes disagree with them, we think they're dedicated professionals who would do their best with or without bonuses -- just as thousands of non-executive employees are working hard for Tribune every day with no bonuses.
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Contact: Bill Salganik, 410-964-5125, 410-245-6520 (mobile)