In an email sent to Tribune employees Wednesday, two top executives said the company has filed a motion in bankruptcy court seeking permission to give $13 million in bonuses to 700 employees for their work in 2008. Another motion seeks permission to pay 70 former employees $2.5 million in severance payments, which the laid-off employees stopped receiving when Tribune filed for bankruptcy.
Tribune owns the Hartford Courant, Fox 61, and WTIC,
“These motions are likely to get media attention, so we would rather you first hear about them from us,” Randy Michaels and Gerry Spector said in their email to Tribune employees.
Read the entire email below.
From: Tribune Communications [mailto:TribuneCommunications@Tribune.com]
Sent: Wednesday, April 22, 2009 15:23
Subject: Message from Randy Michaels and Gerry Spector/Motions Filed Today
This afternoon, Tribune filed two important motions with the United States Bankruptcy Court in Delaware regarding employee matters. They are scheduled to be heard by the court on May 12. These motions were the subject of much discussion and deliberation, both internally and with our Official Committee of Unsecured Creditors. These motions are likely to get media attention, so we would rather you first hear about them from us.
Both of these motions continue our efforts to minimize the disruption of the Chapter 11 process on our employees. We started by obtaining court orders to pay prepetition wages and employee expense reimbursements, and later got court approval to continue commission payments and various local incentive payments to our sales people and other employees throughout the organization.
One motion filed today seeks approval to reinstate severance payments for former employees of the company who lost their jobs in the months prior to the bankruptcy filing. This amount is approximately $2.5 million and covers approximately 70 employees who stopped receiving severance payments when we filed under Chapter 11 of the bankruptcy code.
Another motion seeks approval to make incentive payments of approximately $13 million to approximately 700 individuals across the company for their work in 2008. This is consistent with the company’s long-standing practice of recognizing managers, directors and others for their work during the preceding year. These incentive payments are also an important component of the compensation earned annually by these individuals in the normal course of business.
Of course, 2008 was anything but normal. As you would expect given the difficult economic environment and business climate, these incentive payments have been dramatically reduced from previous years, in some cases being cut by more than 70%. Importantly, the top ten executives in the company are excluded from receiving any payment under the motion.
As the motion states, we think these payments are “…necessary to reward the participants for their extraordinary contributions during an exceptionally difficult year, including implementation of strategic initiatives in 2008 that are expected to generate approximately $425 million in incremental annualized cash flow and the consummation of transactions generating over $1 billion in proceeds.” Without these actions, and the leadership of the people covered by the motion, we would not be able to collectively transform the company as quickly as we must given the challenging economic conditions our businesses operate in today.
As a company, we’ve made tremendous progress over the last year because of your efforts and those of your colleagues. We are a very different company than we were just a short time ago—more nimble, more efficient, and more innovative. Thank you for your continued hard work, your energy and your optimism.
Randy and Gerry