Under pressure from its creditors and unions, bankrupt Tribune Co. agreed to cut back on the bonuses it would pay under its proposed 2010 management incentive plan.
The move comes as Chicago-based Tribune Co. seeks to win approval from creditors for a reorganization plan that would allow it to exit a bankruptcy case that has dragged on for almost 20 months.
Management bonuses have been a flashpoint in the Tribune Co. case ever since the company entered Chapter 11 proceedings in December 2008. Since then, U.S. Bankruptcy Judge Kevin Carey has approved bonus payments totaling $57.3 million, including a payout of $42.1 million for 2009 performance.
Tribune Co., which owns the Chicago Tribune, in May inserted two more bonus plans in its proposed restructuring that would grant an additional $14.9 million to the Chicago-based media conglomerate’s top 35 executives, related to the company’s 2009 restructuring efforts. Several creditor groups voiced opposition to those plans.
It then proposed a bonus plan that would reward 2010 performance with a potential payout of $42.9 million for some 640 company managers. That is the plan Tribune Co. is now proposing to adjust based on negotiations with creditors.
According to a filing in the U.S. Bankruptcy Court in Delaware, Tribune Co. raised its performance targets for the plan somewhat and trimmed the potential bonus payments for the broad group of 640 managers. The company raised performance targets for top executives, too, but the potential bonus payments of between $2.2 million and $5.7 million remain the same.
Under the new plan, Tribune Co. managers can still earn $42.9 million in bonuses if the company generates $685 million in operating cash flow in 2010 — approximately 37 percent more than in 2009.
But at lower performance levels, the payouts would be reduced.
If the company generates $500 million in cash flow — about flat with 2009 — operating managers would get $14.3 million and top managers would get $2.2 million. Under the plan Tribune Co. originally proposed, the performance target was $425 million and the larger group would have gotten $28.6 million. Top managers would still have gotten $2.2 million.
Likewise, if the company generates $550 million in cash flow, the broad management group would get $28.6 million and the top managers would receive $4.4 million. Those numbers were $33.7 million and $4.4 million, respectively, in the old plan.
At the top cash flow target of $685 million, operating managers would get $37.2 million and top managers would get $5.7 million, the same as in the old plan.
The filing said that the Official Committee of Unsecured Creditors in the case would support the new plan. The Washington-Baltimore Newspaper Guild “does not object” to the plan, the document said.
“We’re certainly not delighted with it, but we think it’s gotten a lot better,” said William Salganik of the Washington-Baltimore Newspaper Guild.
Tribune Co. said Mercer Inc., which the company hired to benchmark the plan, has determined that the new plan payouts are “within reasonable market ranges at all levels of performance.” Mercer said the original plan was also within reasonable ranges.
Tribune Co. said it intends to seek approval of the new plan at a hearing in Delaware Aug. 9. The company’s reorganization is currently out for vote and confirmation hearings are set to begin the week of Aug. 30.
You would think that the defender of the First Amendment, the Tribune, would demand its immediate, unredacted release. I guess, though, not about its own business.
[[The move comes as Chicago-based Tribune Co. seeks to win approval from creditors for a reorganization plan that would allow it to exit a bankruptcy case that has dragged on for almost 20 months.]]
If this process has “dregged on,” how long does corporate bankruptcy usually last?
As the Tribune runs stories condemning Gov. Quinn for raising salaries for his staff while the state of Illnois suffers financially, it gives out millions of dollars in bonuses to managers of a company coming out of bankruptcy. Maybe the Trib can run a story critical of itself?
So, with no bonus that means that all the people working their rear-ends off cannot be compensated with anything other than a pat on the back. Sounds like people will be jumping ship….
Poor, poor management. Lower (or no) bonuses. Meanwhile back at the ranch, employees haven’t had a raise in two years!
This is absolutely RIDICULOUS. The 2010 additional bonus for the 35 top execs averages out to about $425,000 per exec. This is IN ADDITION to the bonus already filed AND their salary. This is another example of corporate America lavishing money on the chosen few while the rest of the workforce, who actually do the work, labor for a relative pittance. The execs should be glad they have a good paying job as they would have difficulty finding work elsewhere in an industry that is becoming a dinosaur.
“Hmmmm” is naive – the top does jack and the majority of hard-working, employees that still care about the business and the job haven’t seen a raise in YEARS. Bonuses are bullcrap when Trib continues to cut jobs and bleed losses. Job cuts and corporate greedy looting are not a winning plan. Company has no future. Guaranteed. More corrupt than the politicians they try to go after.
As someone whose job was eliminated after years of stellar performance reviews, I’m happy I’ve been able to contribute to the company’s rising cash flow. Can some enterprising (still employed) journalist publish a list of the managers who stand to profit from my and so many others’ lost livelihoods?
For a newspaper who has taken such glee in publishing the “extravagant” salaries of so many sectors, how about publishing salaries of its own managers and staff.