We recently flagged that the Tribune Company was proposing bankster-style bonuses to its execs while cutting reporting and other staff. Despite the strong objections of employees and their union reps, a federal bankruptcy court judge, Kevin J. Carey, approved paying bonuses totaling $45,000,000 to executives at the media company. Chief Judge Carey was appointed to serve as a bankruptcy judge in 2001, and he's a former partner and member of the Financial Services Department of Fox, Rothschild, O'Brien & Frankel LLP, where he represented financial institutions (big banks), corporate creditors (big lenders), landlords and some corporate debtors in bankruptcy, workouts and financing matters.
This payout amounts to about 11% of the company's 2009 cash flow, according to William Salganik of the Washington-Baltimore Newspaper Guild. He told the New York Times that this high rate of bonus for high-level employees was "unprecedented." He noted that the highest bonuses paid in the previous twelve years was 3.3%, when the company was not seeking bankruptcy protection. The conglomerate has laid off or bought out over 3,000 employees.
The "savings" from paying these reporters, editors, and other news workers paved the way for these unconscionable rewards for the Trib's luxury suites. The court said that the bonus plan was acceptable because under federal bankruptcy law, the debtors "need only show that the proposed plan is an exercise of their business judgment." Well, that's true. It's an exercise of their continuing bad business judgment. If that's all the law requires, then the law has failed. Companies in bankruptcy proceedings have no business paying bonuses, period. That's just common sense. And it's good business judgment. It's profoundly unjust to permit these exorbitant gifts to be paid to the Trib's "leadership." Talk about rewarding failure.
(Here's our original post about the plan that was just approved by the court, with more information:
A U.S. federal bankruptcy court is expected to rule this week on whether the bankrupt Tribune media company can pay its executives big bonuses despite the cuts to its reporting staff. According to Business Insider, the Tribune is seeking to pay out over $45 million to its executives (down from $70 million this summer). The Tribune company probably owns a paper near you: the Los Angeles Times, Chicago Tribune, The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, Morning Call and Daily Press and 23 TV stations and more.
Talk about bankster envy! What's a failing media conglomerate that has slashed staff and frozen salaries doing giving such golden parachutes to management, while ad revenues plummet? It must be hard for the top dogs to take a critical look at the big bankster bonuses when they are pressing hard to line their own wallets. I must confess that I do have a bias, having seen some great investigative reporters I know laid off by the Tribune's "cost-saving" measures, which apparently do not including saving millions of dollars at the top.
"One of the top executives seeking the $2 million bonus said in an e-mail to employees in February that 'a salary freeze enables us to share the sacrifice.' It’s not clear how a $2 million bonus enables the top managers to share the sacrifice."
Talk about spin by the Trib's big thinkers! I don't know about you, but two million would cover a lot of reporting salaries. Of course, that's just one bonus. For $70 million or $45 million, how many reporters could a company that actually cared about reporting keep on staff for the next five years? I'm not sure, given the variation in journalists' salaries, but I'm sure it'd go a long way. So, I for one am sure hoping the federal bankruptcy court throws the Tribune's bonus request in the trashcan, where it belongs.)