The Blog

Whether Trib employees considered themselves owners is, in one way, irrelevant. They were owners. They just didn't have any of the rights and privileges that normally accompany ownership. And from what I can tell, they weren't even asked whether they were just fine with that setup.

(It should make us all wonder, though: Can some Zell-like raider sweep in and use you and your work colleagues' ESOP to take over your company, load it up with debt, retain control, install a Kern-like toady as your boss, richly reward himself for his trouble and then just flit off, leaving the company crippled, the product comically degraded and your ESOP worthless? You have to credit Zell: He has managed to lower the filthy rotten predatory nature of leveraged buyouts to new, satanic depths.)

So how does this affect the Los Angeles lawsuit? Will it move continue to move forward? If some of the creditors are suing over alleged (actually, undeniable) "fraudulent conveyance," what would the legal term for this employee-ownership shenanigan be?

“Whether Trib employees considered themselves owners is, in one way, irrelevant. They were owners. They just didn't have any of the rights and privileges that normally accompany ownership.”

Before I was fired 8-8-08, I never received a single share of Tribune stock from the Zell-arranged ESOP. I may be wrong, but I don’t believe any employees ever did. So while the Employee Stock Ownership Plan may have been the largest shareholder, none of the employees were, themselves, shareholders. Which is probably why they never considered themselves owners. Because they weren’t.

Ron Silverman

Did you know the Chinese use the same word for "Crisis" and for "Opportunity": "Sam Zell."

-- MrJM
http://twitter.com/misterjayem

But it's an EMPLOYEE Stock Ownership Plan. For me, this isn't a minor point, as my employer has an ESOP and I'd rather it and my future not be plundered, with the ESOP itself used as the principal bludgeon.

If an ESOP is just a minor player in a company's ownership structure, that's fine. It can be just a quiet little entity off in the corner. But once it becomes the majority owner--particularly in a shakeup such as Zell engineered--the ESOP becomes a whole new creature, its purpose switches from a sleepy little retirement perk to wide-scale instrument of change, pillage and plunder.

If ESOPs in future can be seized willy nilly by characters like Zell and used in this way, it's a concern. ESOPs were never intended as weapons of mass destruction. When they are used in this way, and employees are left out of the loop, something is screwy, regardless of whether employees get stock certificates or not.

The banner in the Tribune lobby did say, "You OWN this place." That's good enough. Hope someone involved in the lawsuit in L.A. got a photo of the banner in the LA Times lobby.

Pelham,
Yes, it was CALLED an employee stock ownership plan, but it wasn’t SET UP or CONTROLLED by a majority of the employees. Zell didn’t exactly SEIZE this ESOP so much as he created it to take over the company, and, as I recall, employees had one representative on the board that controlled it. And yes, when ESOPs are used in this way, it's a concern, and something is screwy. And yes, the banner in the Tribune lobby (and on placards around the rest of the building) did say, “You OWN this place.” And the banner behind George W. Bush on that aircraft carrier said “Mission Accomplished.” And nobody with an ounce of sense believed either.
Ron Silverman

@Ron Silverman

Of course no one believed the banner. But they should have acted on it precisely BECAUSE no one believed it. It's called overidentification, or seizing on an obvious contradiction in a power structure to undermine it. Whole governments are brought down this way; it shouldn't have been any great trick to trip up one crackpot billionaire.

I'm just disappointed, given the 24-karat opportunity represented by an obviously BS campaign that could easily have been flipped to the employees' (and readers') advantage, that no one in the old guard at the Tribune seized the occasion to stir up the rabble once it became clear what the Zell people had in mind.

Someone widely respected by journalists there--maybe Jim Warren or Lipinski herself-- would even have had an actual, physical banner to rally the troops under. Instead, it now appears, they just quietly took their hush money and left.

Pelham,
I didn’t say no one believed the banner; I said nobody with an ounce of sense believed it. Sadly, some people did. But even if no one HAD believed it, what makes you think the Tribune at that time—or any time—was a place where the rabble could be stirred up? And how do you know it could have been done easily (“It shouldn't have been any great trick to trip up one crackpot billionaire”; “an obviously BS campaign that could easily have been flipped to the employees' [and readers'] advantage”)? And besides the silly signs and statues and pinball machines, what track record did Zell have with newspapers that should have caused people to believe they needed to revolt as soon as he took over? And how do you know what anyone in the old guard at the Tribune did or tried to do anyway?
Ron Silverman