Sign up for our newsletters Subscribe
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