Bankruptcy judge approves up to $45M in bonuses for Tribune managers

Del. judge approves Tribune bonuses

WILMINGTON, Del. — A Delaware bankruptcy judge on Wednesday approved bonuses of up to $45 million for hundreds of Tribune Co. managers, including its top 10 executives.

Judge Kevin Carey overruled objections by the Washington-Baltimore Newspaper Guild and the U.S. bankruptcy trustee, saying the 2009 incentive plan covering some 720 employees was justified.

Tribune, which owns the Los Angeles Times, Chicago Tribune, The Baltimore Sun and other dailies, along with 23 TV stations, filed for bankruptcy protection in December 2008 because of dwindling advertising revenues and a crushing debt load of $13 billion. Much of that debt was amassed when real estate mogul Sam Zell took the company private in 2007.

Last year, Tribune proposed three separate employee bonus plans, arguing that they were needed to retain top managers working in a difficult environment.

The Washington-Baltimore Newspaper Guild, which represents about 230 employees of The Sun, argued that the bonuses were unwarranted. The Guild was joined in its objection by the U.S. trustee, two Baltimore-based Teamsters locals, and the Newspaper Guild of New York, which represents 29 employees at television station WPIX.

The ruling Wednesday’s clears the way for the checks worth tens of millions of dollars to be distributed next month.

In approving the incentive plan, Carey said that Tribune is operating in a troubled industry which has seen roughly a dozen large media companies seek bankruptcy protection.

“Here, the evidence demonstrates that the debtor was performing well relative to its competitors,” Carey said. “… I conclude that the relief requested is justified by the facts and circumstances of the case.”

Tribune chief financial officer Chandler Bigelow III testified in September that the bonuses were designed using operating cash flow as the key metric and a 2009 target of $212 million, less than a third of the previous year’s $789 million. By the time of the hearing, the company already had exceeded the 2009 target, with a projected year-end figure of between $350 million and $400 million.

Bigelow rejected Guild claims that the target was set too low, and Carey said Wednesday that it would not be fair “to move the goal posts” in the middle of the performance period.