Wednesday, April 22, 2009
News / News Bites For the haves -- bonuses; for the haven'ts -- severance
Posted by Michael Miner on 04.22.09 at 03:47 PM
As the ax fell and fell again at the Tribune Wednesday, a message to all hands was issued by Randy Michaels, chief operating officer of the Tribune Company, and Gerald Spector, executive vice president and chief administration officer. At the bottom of the message was word of $13 million in "incentive payments" that -- bankruptcy court willing -- will be paid to some 700 directors, managers, and others for their work last year. These payments "have been dramatically reduced from previous years," Michaels and Spector asserted.
At the top of the message was the news that Wednesday afternoon the company asked the bankruptcy court for permission to reinstate severance payments totaling about $2.5 million to some 70 former employees. These payments were frozen when the company filed for bankruptcy last December.
Here's the full memo:
From: Tribune Communications [mailto:TribuneCommunications@Tribune.com]
Sent: Wednesday, April 22, 2009 2:23 PM
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 D 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.elaware
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 extraordiinary 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 nimmble, more efficient, and more innovative. Thank you for your continued hard work, your energy and your optimism.
Randy and Gerry
Comments (6)
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Are you kidding me. They want to reward the managers for carrying out their orders. FIRE MORE REPORTERS. Give me a break. They just laid off 53 people and all they can think about is bonuses for managers. What a joke. Isn't this what AIG just tried.
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For the severance cases, this works out to $35,700 per former employee. Since some had probably already started receiving severance payments, the typical package should be higher. I wonder if today's victims are getting similar severances. Upper management would appear to be averaging $18,600 for their bonuses, though I suspect the distribution is heavily skewed toward the top end, i.e. the median is much lower than this amount.
Would be interesting to recall how Tribune/LATimes editorial boards responded to AIG bonuses in print. It would be even more interesting to learn their opinions -- in print -- on their company's current request for bonuses. Perhaps, the editorialists also could demand to see an actual list of proposed recipients of said bonuses, so the next-to-be-fired could have an even better handle on the depth of hypocrisy. In my day, bonuses were cut for editors down to Level 19, which would include certain section editors, associate and deputy editors, and above. They were based almost exclusively on company perfomace, not merit. That changed, I believe, but not much. I assume, now, they would based on how willing the editors were to ruin the lives of their former associates and turn the newspaper into a laughing stock. Those bonuses were generous and much appreciated. They weren't, however, taken for granted by the newsroom managers ... as would appear to be the case with those EXPECTING bonuses for the current, failing company. No guarantee was made when one was promoted into the bonus levels, and there were two years, at least, when they either were postponed or eliminated. If any bonuses are rewarded, the bankruptcy court should demand that every potential recipient be called before the bench to defend their performance in 2008. Better, though, that money should be put into a fund to benefit fired employee/owners whose monthy COBRA payments soon will test the $1,000 barrier. I suspect, as well, that several of the editors let go in last year's purge would have been eligible for full or partial bonuses. They probably signed away that privilege, though, along with their right to condemn the company, in severance agreements. Pressure should be put on those Illinois politicians who condemned AIG bonuses to do the same with those intended for Herr Zell's storm troopers.
More from the chief operating officer: "You get Google alerts? That's where I'm getting my news! I run a very large newspaper company, and I get my frickin breaking news on Google. I get my news about the Chicago Tribune from Google!" "Gerry Kern was an editor at the Daily Press, was promoted to a corporate position. We moved him back DOWN to take that. That was actually a demotion. In a sense." "They can have an opinion. But not if they're in charge of..." "Not enough! Anybody who doesn't want to change needs to go!" "We can hire anybody we want. Why not?" "O.k. But if you're one of the hires as opposed to one of the fires..." "Do they have a good attitude about change?" -- " the answer is no... it doesn't matter how important what they do is."
Of course, just as with AIG, it's vitally important to incentivize those valued managers who got you into the damned mess in the first place. Tribune Co., the AIG of American journalism. Just as AIG wasn't really about insurance, neither is the new Tribune about journalism. Sweet.
