Tribune Co. is seeking permission to hand out an additional $43 million in bonuses, bringing to $115 million the grand total of management pay enhancements put before a bankruptcy judge for approval.
Leaders of the media company are at risk of being “severely undercompensated” without additional bonuses keyed to accomplishments in 2010, Tribune said in a filing Wednesday in the U.S. Bankruptcy Court in Wilmington, Del.
The request comes as Tribune is pushing to emerge from bankruptcy, leaving billions of dollars’ worth of debt unpaid. Court papers estimate the company has about $6.1 billion in value to distribute in the reorganization. Tribune arrived in bankruptcy owing more than $12 billion.
Wednesday’s filing of the 2010 bonus program followed the unveiling Monday of $15 million in pay enhancements for 42 top-ranking Tribune executives, payments that are built into the company’s Chapter 11 plan. Top leaders are also supposed to get a piece of the company once it emerges from Chapter 11, but Tribune hasn’t said how big a piece.
Between May 2009 and February, the company paid out $57.4 million of management bonuses. Some of that, $12.2 million, was to reward performance in 2008, the year the company collapsed into bankruptcy. The rest of the previous bonuses were for 2009, a year that saw revenues continue to ebb.
The Chicago-based broadcaster and publisher of the Chicago Tribune, Los Angeles Times, Baltimore Sun and other newspapers is due in court Friday to seek final permission to send its Chapter 11 plan out for creditor votes.
Judge Kevin Carey last week overruled objections to the report that explains Tribune’s reorganization proposal, and granted preliminary approval to start the voting process. Friday’s hearing will address an objection from the Baltimore-Washington Newspaper Guild that was triggered by Monday’s revelation of the $15 million in bonuses built into Tribune’s Chapter 11 plan.
The Guild objection is one of only two remaining obstacles to the start of balloting on a restructuring plan that would make Tribune the property of creditors, according to a court filing.
The union’s challenge over the 2009 bonuses forced a trial last year in bankruptcy court. Tribune defended the bonuses by saying it needed to keep executives motivated in the face of adversity in the media industry.
In renewing its protests this week, the union said Tribune used “seriously flawed” data to justify its bonuses.
About an hour after the union objection to the Chapter 11 plan bonuses appeared on the court docket, Tribune filed a motion seeking approval of another round of management incentives, this time for 2010.
As with previous extra pay packages, Tribune declined to say how much is marked for company insiders, a group subject to extra scrutiny under bankruptcy law.
Tribune’s “top management” is in line to share $5.7 million of the latest round of bonuses, which are keyed to 2010 performance, the company said.
(This report is from Dow Jones Daily Bankruptcy Review, which covers news about distressed companies and those under bankruptcy protection.)
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