Posted by chicagomedia.org on July 22, 2009 at 19:06:47:
Tribune Co. asks bankruptcy court to allow bonus payments
Chicago Tribune parent Tribune Co. filed a motion Wednesday in Delaware seeking U.S. Bankruptcy Court authorization to implement a performance-based bonus plan for managers, directors and other key staff members for their work this year.
The proposed plan covering more than 700 employees 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.
The company, which filed for Chapter 11 protection in December because it was struggling to manage the heavy debt it took on in going private a year earlier, also is seeking court permission to pay 2008 bonuses belatedly to its top 10 executives. Those incentive payments were deferred this spring when Tribune Co. sought court approval for last year's performance to expedite the process, according to Wednesday's motion.
"There can be no serious debate about whether the top 10 executives have earned their 2008 [Management Incentive Plan] awards," the motion says.
Tribune Co. Chief Operating Officer Randy Michaels and Chief Adminstrve Officer Gerry Spector, in a note to employees, pointed out that billionaire investor Sam Zell, Tribune Co.'s chairman and chief executive, will not be getting a bonus for either 2008 or 2009.
Michaels and Spector 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.
Meeting those 2009 goals would mean dividing a bonus pool of $17.5 million with a median payout of $13,245. If the company achieves 142 percent of its goals, recipients would divide a pool of $35 million. A "maximum" performance of 200 percent would mean splitting a pool capped at $45.5 million.
Additional self-funded bonuses based on improved cash flow would be available for 21 people deemed critical to Tribune Co.'s Chapter 11 restructuring efforts as well as to 23 employees considered key operators, a group that includes six of the company's top 10 executives.
"Incentivizing employees is essential to Tribune’s future success," Michaels and Spector wrote, noting some 3,000 employees not covered by the management bonus plans divided $8.8 million in incentive pay. "Our employees are committed and working harder than ever to make improvements happen across the company. We must continue motivating our people to overcome obstacles, achieve our performance goals and take the company to the next level."
They called progress "slow, but sure," but said that, compared to others in the media business, "we are more competitive than we've been in some time."
In April, Tribune Co. filed its motion for 2008 bonuses the same day its flagship Chicago Tribune reduced its newsroom staff by 53. The company at that time sought permission to pay discretionary incentive bonuses for 2008 to nearly 700 managers, directors and others.
Tribune Co.'s top 10 executives at that time were not included in the managerial pool that split a little more than $13 million in bonus money, which the company considered part of recipients' annual compensation as part of the normal course of business. The amounts of those incentive payments for 2008 were negotiated downward by several million dollars.
(Phil Rosenthal, Chicago Tribune)