Owners of the bankrupt Tribune media company asked a judge to allow it to pay 700 employees a total of $13 million in bonuses in a move that its top executives acknowledged was the subject of much internal discussion.
Tribune, which owns the Hartford Courant and the Fox 61 television, filed two motions in U.S. Bankruptcy Court in Delaware. The other motion seeks approval to reinstate severance payments for former employees of the company who lost their jobs in the months prior to the bankruptcy filing. Tribune executive Randy Michaels, in a memo to employees this afternoon, said that motion deals with $2.5 million and covers approximately 70 employees who stopped receiving severance payments
The motions 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,” Michaels wrote to employees.
The motion seeking to pay bonuses to 700 employees – excluding the “top ten” executives at the company — “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,” said Michaels.
He wrote that the “incentive payments have been dramatically reduced from previous years, in some cases being cut by more than 70%.”
He continued, “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.”
Tribune, which also owns the Los Angeles Times, Chicago Tribune, The (Baltimore) Sun, and other dailies, as well as 23 television stations and the Chicago Cubs baseball team, was forced to seek bankruptcy protection because of dwindling advertising revenues.
