Blast from the past: Tribune Co. in bankruptcy but management receives bonuses July 24th, 2009

FRIDAY, JULY 24, 2009

Tribune Company Bonuses to Managers

Tribune Company CEO Randy Michaels and CAO Gerry Spector sent a memo out on Wednesday July 22, 2009 regarding the motions filed with the bankruptcy court regarding bonuses to 700 managers. The payouts will be between $21.5 million to $66.7 million, with 9 of the top 10 executives dividing $3.1 million among themselves.

Expecting some type of descent from the working class at Tribune properties across the country, their memo explains the need for bonuses, for us simple-minded folks to understand. As usual I could not locate anyone from my department that was allowed access to their message, so here it is.

From: Tribune Communications
Sent: Wed Jul 22 13:56:02 2009
Subject: Message from Randy Michaels & Gerry Spector/Motion Filed Today

Today we filed a motion asking the United States Bankruptcy Court in Delaware to approve the implementation of a comprehensive performance-based incentive plan for 2009 for key employees across the company. This plan has been reviewed and approved by the Compensation Committee of our board of directors and has the support of the Official Unsecured Creditors Committee and our senior lender Steering Committee. This motion will certainly draw some media attention, so we’d rather you hear about it from us first.

Importantly, this is a pay-for performance plan that pays nothing if our companywide and/or business unit operating goals are not met. The plan is more conservative than in past years in that it requires the company to meet its 2009 operating goals before recipients are eligible for any payout, instead of allowing for a smaller payout in the event of reduced operating performance. In fact, a full payout can only be achieved by significantly exceeding the company’s 2009 operating plan.

As submitted to the court, the plan has three components, including:

• A management incentive program (MIP) with performance metrics based on our 2009 operating plan as approved by our board of directors earlier this year. This is consistent with our long-standing practice of incentivizing and rewarding employees for exceptional performance. More than 700 employees will be eligible for incentive pay under this part of the plan. This program is generally consistent with the 2008 program that was paid out following court approval earlier this year, with certain aspects that are more conservative than prior years’ programs.
• A transition management incentive program which is tied to the same operating metrics and is designed to incentivize key managers to continue to focus on maximizing operating cash flow while performing substantial duties related to our restructuring efforts.
• A supplemental program designed to incentivize business unit leaders to maximize cash flow for their particular operations.

We have also asked the court for approval to pay the earned 2008 MIP awards to our top executives. As you may recall, in May we deferred requesting authorization to pay the top executives following discussions with our key constituents to avoid delays in paying the other 710 employees in the program. The court approved these payments and now, after further discussions with our key constituents, we are seeking payment for the remaining employees so that they will be treated the same as other MIP participants. (Sam is not part of this group, and is not seeking a 2008 MIP award. He is also not a participant in any of the 2009 incentive plans.)
For those who don’t participate in this plan, the company still offers a variety of other incentive programs. Earlier this year the company paid out approximately $8.8 million in various local incentive payments to more than 3,000 employees companywide. We fully expect to continue this practice.

Incentivizing employees is essential to Tribune’s future success. Our employees are committed and working harder than ever to make improvements happen across the company. We must continue motivating our people to overcome obstacles, achieve our performance goals and take the company to the next level.

As a company we are making progress—it is slow, but sure. Looking around the media industry, thanks to your hard work and dedication, we are more competitive than we’ve been in some time. Let’s keep it up.

Randy and Gerry