Tribune Co. Seeks Bankruptcy Court Approval of Management Bonuses
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Tribune Co. Asks Bankruptcy Judge to Approve up to $42.5 Million in Management Bonuses

September 1, 2011


Tribune Co. asked the judge in its bankruptcy case Wednesday for permission to pay 2011 management bonuses totaling a possible $42.5 million.

The bonuses would be paid out to 640 management employees and are dependent upon the media conglomerate’s operating cash flow performance this year.

The plan, approved by the court in February, calls for Tribune Co. to pay $16.4 million in bonuses if it reaches "threshold" performance, $32.4 million for "target" performance or $42.5 million for "maximum" performance. The payment amounts are slightly lower than those requested in the company’s 2010 plan.

The company reported in January that it generated $635 million in cash flow last year. In February, it revised its 2011 cash flow forecast to $497 million in order to reflect expected declines in political advertising and newspaper performance. The conglomerate’s leading papers include the Chicago Tribune and Los Angeles Times.

The $635 million cash flow in 2010 matched Tribune Co.’s maximum goal, allowing $42.9 million in management payouts.

The Chicago Tribune reported that Tribune Co. is allegedly meeting this year’s expectations, due in large part to its broadcasting division, which includes more than two dozen television stations.

The company’s senior creditors have shown support for the bonus request, but have requested tighter performance requirements and stipulations for two Tribune Co. executives.

Chandler Bigelow, chief financial officer, and Dan Kazan, senior vice president for investments are defendants in potential litigation regarding Tribune Co.’s 2007 buyout. The two executives were barred from receiving 2010 bonuses and their bonuses this year would be placed in an escrow account pending the outcome of their case.

Tribune Co. filed bankruptcy a year after the 2007 buyout by billionaire Sam Zell, loading the company with $8 billion in additional debt. The company has argued for the management bonus program every year following the bankruptcy filing.

U.S. Bankruptcy Judge Kevin Carey has passed each of the annual bonuses despite opposition from unions and creditors, which claim the payouts are too high in relation to the company’s diminished cash flow and continued layoffs.

Tribune Co. is currently awaiting Judge Carey’s decision regarding one of the two restructuring plans the company has proposed in order to emerge from bankruptcy.

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