Executives from the bankrupt Tribune company who want to pay themselves $70 million in bonuses will have to show Newspaper Guild members who is getting paid and how much, a Judge ruled yesterday.
Real estate mogul Sam Zell bought the Tribune company and took it private in 2007. Then he took on about $13 billion in debt.
With that load and ad prices plummetting, the Tribune Company filed for Chapter 11 in December.
Here’s the AP report on the bonuses:
Newspaper Union to See Tribune Bonus Information
WILMINGTON, Del. (AP) — A union representing newspaper workers should be allowed to see details about the Tribune Co.’s proposal to give bonuses totaling up to $70 million to the company’s top managers, a federal bankruptcy judge ruled Tuesday.
Judge Kevin Carey said details about the proposed bonus plan should be provided on a limited basis to attorneys for the Washington-Baltimore Newspaper Guild, which represents 225 workers at the Tribune-owned The (Baltimore) Sun and opposes the bonuses.
The judge agreed to allow the Chicago-based company to keep under seal a compensation consultant’s report underlying the bonus plan and said information to be shared by the Tribune will be restricted.
”It’s going only to the Guild,” Carey ruled, denying the Guild’s request to share the information with other unions, including those that joined in its objection to the bonus plan. Only the Guild made a formal objection in the case; the others joined in the Guild’s petition.
Tribune, which also owns the Los Angeles Times, Chicago Tribune, 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 load. Much of that debt was amassed when real estate mogul Sam Zell took the Tribune Co. private in late 2007.
The company defended the proposed bonuses, saying they are based on specific performance targets and are needed to retain key employees facing significant industry challenges while working toward a successful reorganization. The bonuses, the company said, will help attract top-tier management talent if needed.
The Guild has argued that the performance targets are virtually guaranteed to be met and that the bonus plan could be a disguised retention plan for insiders.
Carey said he would decide later who within the Guild should be allowed to see the information. He scheduled a telephone conference with attorneys Friday to discuss the issue before ruling on the Tribune’s request for a protective order to limit dissemination of the information.
A hearing on whether the court should approve the bonus plan itself was postponed until September.
Carey’s ruling came after he said the Guild should be able to see certain information, subject to confidentiality provisions, solely for use in arguing its objection to the bonuses. He ordered a brief recess in Tuesday’s hearing to allow attorneys a chance to discuss a mutually agreeable approach.
Tribune attorney Jonathan Lotsoff later told the judge that disagreements remained, even though the company had offered to provide the Guild essentially all the information it has given to its creditors committee, which includes a Guild representative.
Guild attorney Michael Joyce said the union would welcome that information, but because it did not know what is included, it may need to pursue additional details.
In a filing last month, the company proposed continuation of an incentive plan for about 720 employees, including its top 10 executives, with a maximum payout for this year of $45.6 million.
Tribune also has proposed bonuses of up to $10.6 million to be divided among 21 core managers, including the top 10 executives, for operating and restructuring efforts; and up to $9.3 million in performance bonuses to be divided among 23 key operations leaders. It also is seeking permission to pay about $3 million in bonuses earned last year to nine top executives.
Attorneys for the Tribune’s creditors committee and a steering committee of its senior lenders reiterated their support for the bonus plan Tuesday.
”We believe the targets are appropriately set to incentivise the right people to maximise the value of the estate,” said Damian Schaible, an attorney for the steering committee.
Also Tuesday, an attorney for Philadelphia Newspapers said the company hopes to use $35 million in new capital to settle nearly $400 million in debt and emerge from bankruptcy. An opposing creditors’ plan would leave the newspapers saddled with up to $85 million in debt, making it difficult for The Philadelphia Inquirer and Philadelphia Daily News to survive, company lawyer Larry McMichael said in court.
A new judge handling the case chided various parties involved for offering ”untenable” options to resolve the company’s finances. Chief U.S. Bankruptcy Judge Stephen Raslavich ordered all sides — the company, creditors and the union representing writers and photographers — to stop bluffing or risk having the city’s two largest dailies fold.
Philadelphia Newspapers filed for bankruptcy in February, less than three years after a group of local investors bought it for $515 million. The bankruptcy has proven contentious, with the owners and lenders locking horns over who will ultimately control the company, who should provide interim financing and who should engage in upcoming labour talks.
The company, which has reported better-than-expected cash flow this year but has made little progress addressing its gargantuan debt, faces an Aug. 31 deadline to file its reorganization plan. The parties return to court Aug. 18.
Elsewhere, Journal Register Co., publisher of the New Haven (Conn.) Register and other newspapers, said it has emerged from bankruptcy protection and secured new financing from its lenders, six months after making its Chapter 11 filing.
The bankruptcy process was relatively quick because the company, before making its filing in February, had reached an agreement to cancel its stock and become a private company controlled by its lenders. With that plan approved by a federal bankruptcy judge, the company received exit financing of $150 million from JPMorgan Chase and $75 million from Wells Fargo as well as a new credit agreement with Wachovia.
The Yardley, Pa.-based newspaper publisher sought protection from creditors amid one of the worst advertising declines in the industry’s history. It will continue under the management of interim CEO Robert Conway, who was hired as a chief restructuring officer last year and replaced former CEO James Hall after the bankruptcy filing.
Associated Press writers MaryClaire Dale reported from Philadelphia and Andrew Vanacore contributed from New York.
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