By Michael Onealchicagobreakingbusiness.com
Tribune Co. plans to pay 35 of its top executives $14.9 million in additional 2009 bonuses, a court filing revealed late Monday, despite pointed opposition to the proposal from several key constituents in its 17-month-old Chapter 11 bankruptcy case.
The company describes the bonuses, devised as two plans, as rewards for steering the company through bankruptcy court while generating total operating cash flow of $494 million in 2009.
The payments would supplement $42.1 million in management incentive bonuses the court allowed Tribune Co. to pay in February to approximately 670 managers, including most of the executives included in the most senior group.
The two new plans also anticipate paying $1.3 million in discretionary bonuses to a group of 50 managers who management deems to have made valuable contributions to the restructuring. None of those awards can exceed $65,000, the document said.
The total of $58.3 million in bonuses represents $5 million less than the maximum the company could pay under the proposed plans, which are tied to management's exceeding previously set performance targets.
The company said several operating executives failed to meet their targets or exceed them by enough in 2009 to merit the highest rewards.
Tribune Co.'s push to pay the bonuses, despite the fact the company is in bankruptcy and still facing declining revenue, has been controversial from the start.
The initial motion in July 2009 generated a storm of protest from the U.S. Bankruptcy Trustee and the company's unions, who argued that the company's performance targets were set too low initially, allowing Tribune Co. to beat them easily.
But several key constituencies in the case, including the Official Committee of Unsecured Creditors, supported the motion and at a hearing in January, U.S. Bankruptcy Judge Kevin Carey approved the broader bonus program, while suggesting the company include the other two programs in the "disclosure statement" that must accompany its plan of reorganization.
The first version of the disclosure document, filed in April, did not include details on the senior bonus plans yet several creditor groups warned that they were concerned about the potential payments, as well as a future plan under which the company had said it might set aside as much as 7.5 percent of the company's equity for ongoing management incentive rewards.
Even two key creditor allies who otherwise support the company's restructuring -- JPMorgan Chase and Angelo, Gordon & Co. -- have taken issue with the amount the bonus plans grant to a few top executives.
At Carey's insistence, the proposed bonus payments were included in a new version of the plan that Tribune Co. filed Monday night, despite the creditor protest.
Tribune Co. said in a statement Tuesday that "We are working to address any issues creditors may have and are confident that these performance-based compensation plans will get approved as part of our Plan of Restructuring."
Sources said Tribune has already reworked language surrounding the future equity incentive plan to make its creditors more comfortable. The initial proposal of a 7.5 percent set-aside as a pool for equity incentive programs has been trimmed to 5 percent.
Creditors also demanded that the company's future board of directors, not the current one, decide how the plan works and how much stock management will be granted after Tribune Co.'s emergence from bankruptcy.
Nevertheless, one source close to the situation said Tribune Co. will likely face continued opposition over the compensation issues, adding to a mix of problems that several participants, including Carey, have said will likely make the scheduled confirmation hearings in August contentious and difficult.Tribune Co., which owns the Chicago Tribune, Los Angeles Times and other media assets, still faces stiff opposition from a group of senior creditors led by hedge fund Oaktree Capital Management, as well as several subordinated creditor groups.
The new disclosure statement does address some concerns -- most notably a call for more information about potential legal claims against the company's 2007 leveraged buyout and a key change in voting procedures that had incited protest.
But Tribune Co. lawyers are still wrangling over the wording in a position statement issued by a group of bridge lenders destined to get a tiny payout under the proposed settlement. And Oaktree, among others, shows no sign of backing off its opposition.
Objections to the newest version of the disclosure statement are due Wednesday and a hearing is scheduled to take up the document on Friday.
Assuming it passes, Tribune Co. will have 60 days to solicit votes of support for the plan with the hope of having it confirmed duringhearings scheduled for the week of Aug. 16.
www.chicagobreakingbusiness.com Reader Comments:
Darius May 25, 2010 12:03 PM Reply
The article did not mention the huge bonuses for reporters, editors, pressmen, proof readers, delivery people, etc. Or was there nothing to mention?
p. hertz May 25, 2010 12:14 PM Reply
Rewards for complete failure. Gotta love it.
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Joe May 25, 2010 12:21 PM Reply
And the captain of the Titanic should also get a bonus.
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reasonableman May 25, 2010 12:28 PM Reply
Really? This is just AMAZING in light of the Tribunes recent, rabid attacks against Teachers and teacher pensions. Seems the Trib is "out of money" (in bankruptcy) but sees no problem in paying out bonuses to itself. What hypocrisy.
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justalittlecommonsense2 May 25, 2010 12:56 PM Reply
I now know the true definition of hypocrisy. It's spelled T-R-I-B-U-N-E.
How dare you criticize the people who make this city work ( cops, fire fighters, streets and sanitation, bus drivers, teachers) and tell them that they are going to have to take a pay cut and not have their pensions funded because of the state of the economy and then give millions of dollars in raises to the executives (who never have to get their hands dirty) of a bankrupt company.
I guess this is a case of "Do as I say, not as I do!" Shame on you!
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ImBaragas May 25, 2010 1:00 PM Reply
WHAT?????? Bonuses when the industry is going down the toilet? Ad revenues and subscription are plummeting.
How dare management continue to rape and pillage organizations that have employees that depend on the organization for their lives.
I wonder just how management can live with themselves. Oh, wait, the selfish and narcissisitic don't care about anyone but themselves. I wonder how well they sleep knowing that they are putting thousands of people in financial jeopardy while management has their entire retirement funded.
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nancy May 25, 2010 1:35 PM Reply
I am a business professional but it amazes me how these top execs set it up so they make millions of $$ off companies that fail or are failing. Meanwhile the people at this company are working like dogs and being laid off right and left - something is wrong here.
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IRS May 25, 2010 1:49 PM Reply
The Tribune Company doesn't pay taxes either - it was allowed by the judge set up its bankruptcy so it didn't even have to pay capital gains on the Cubs sale - that $200 million they stole would have gone a long way towards paying teachers salaries.
Add in the the Tribune's illegal ESOP tax-evasion fraud, arrears in payroll taxes, property taxes, etc, and it's easy to see why governments are broke. Also, the banks that "loaned" Zell the money for the Tribune got paid back - by us, because "only the little people pay taxes" - leaving more holes in funding.
If this was a country with real laws, Sam Zell and his tag-alongs would only have one thing left to do: wait to die in a prison cell.
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why May 25, 2010 1:50 PM Reply
WHY? Make them turn it over to the state and put it all into funding the shortfall for Education, then 17,000 teachers might not have to lose their jobs.
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jack (the real one) May 25, 2010 2:03 PM Reply
The Tribune Company, especially its electronic publishing operations, WGN Radio, and WGN TV are horribly mismanaged, and the executives deserve nothing.
Not to mention lack of bonuses for those working on the lines, how about the severance compensation that the Tribune used bankruptcy to avoid? I think that's fraudulent.
However. Oneal still feels it important to report on the company line.
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TribSUX May 25, 2010 2:14 PM Reply
Everyone at the Chicago Tribune should be very ashamed of themselves, the execs for their unbridled greed and avarice, the lower ranks for taking it and doing nothing about it.
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hello May 25, 2010 2:25 PM Reply
If the company is losing money where does this money come from, it sounds like they get their money before anyone else including creditors.
Grabbing money off the top before the company fails, sickening.
Good luck trying to do that if you are are a person facing credit problems.
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The Mad Hatter May 25, 2010 2:46 PM Reply
Ha! As usual, the underlings get the shaft while the overlords ride the elevator to the high life. You Tribune reporters and editors are just a bunch of stupid sheep. You should all walk off the job if these bonuses are paid to executives who bankrupted your company, put hundreds of your friends and colleagues out of work, and have derailed any hope you had of having a decent retirement. Instead, you rail against others whose pensions haven't been taken away yet. You are truly stupid journalists.
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Stupid-Is Stupid-Does May 25, 2010 2:53 PM Reply
$14,000,000 / 35 = roughly $425,000 per person bonus. Good thing the Tribune is flush with cash and not having the financial troubles like the Sun Times and most hard working common folk these days.
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Pete May 25, 2010 2:57 PM Reply
LOL - steer through bankruptcy? I think the entire country has gone wacky with diverting responsibility. When will the madness end.
Well here is your bonus - I am canceling the home delivery of the paper. Calling right now.
Just canceled my subscription to the Tribune. The gentlemen on the phone was very cordial and tried his best to keep me as a subscriber.
I asked if he received a bonus and he said he did not.
He asked what it would take to get me back - I said have the top 35 turn in the 14M and I will come back.
He ended by saying thank you and was hoping I would subscribe in the future.
Lake in the Hills
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LAME May 25, 2010 3:29 PM Reply
i have lots of friends that were laid off here because they didn't have money to pay them and the same people are giving themselves bonuses. thats pathetic and not right!
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FoxSnooze May 25, 2010 4:35 PM Reply
Makes me sad to see the greed on display in so many companies these days, and the people at the top blame the union workers and their "high" wages/benefits!
Shame on the Tribune!!
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Frank May 25, 2010 5:38 PM Reply
"Darius May 25, 2010 12:03 PM Reply The article did not mention the huge bonuses for reporters, editors, pressmen, proof readers, delivery people, etc. Or was there nothing to mention?"
Didn't they lay off or fire most of those people? Must be where they got the money for such stellar performance from the execs.
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