Tribune Co.'s senior executives and key employees could be in for a handsome payday if they lose their jobs in a sale of the company that owns the Los Angeles Times, KTLA-TV Channel 5 and the Chicago Cubs baseball team, documents show.
According to a Securities and Exchange Commission filing on Thursday by the Chandler family trusts, which is among the bidders for the Chicago-based media company, “change of control payments” to Tribune executives could total $269 million.
The filing doesn’t say how many executives and managers would be eligible for such payments, how much each would get or exactly who is covered.
But dozens of executives and key employees, led by Chief Executive Dennis J. FitzSimons and two top lieutenants, publishing President Scott C. Smith and broadcasting President John E. Reardon, are among those eligible if they are fired within three years of a change in control.
A company spokesman declined to comment.
Tribune said in its proxy filing before last year’s annual shareholders meeting that 24 key employees were eligible for the payments. A person with knowledge of the recent sale talks, however, said the company expanded the group to about 50.
This person -- who spoke on condition of anonymity, citing the sensitive nature of the talks -- said the Chandlers “artificially inflated” the $269-million estimate in an attempt to embarrass the company’s beleaguered executives.
Bad blood between the Chandlers and Tribune, which bought the former Times Mirror Co. in 2000, has flared into a nasty public spat as the company’s stock has slumped, triggering the pressure to solicit bids.
The exit checks -- much of it previously deferred compensation -- would be closer to $200 million if all the covered employees were fired, this person said.
A spokeswoman for the Chandlers declined to comment.
FitzSimons could be eligible for more than $10 million, said Ron Bottano, senior client partner at Korn/Ferry International’s executive compensation group in Los Angeles.
That includes about $8.6 million that would be paid as a multiple of FitzSimons’ annual salary and bonus target. It also includes $1.8 million from 60,000 units of restricted stock that were granted last Valentine’s Day and would vest immediately.
Bottano based his estimates on current “market practices” but noted that Tribune’s executive bonus targets are not disclosed.
He also noted that stock options granted to Tribune executives in recent years could be worthless because of the stock’s drop from more than $50 a share in 2004 to its current $30.90.
Change-of-control plans have become increasingly common at large companies. About 80% have implemented them, he said.
But they can be controversial, as when WellPoint Health Networks Inc. merged with Anthem Inc. in 2004, prompting severance and deferred compensation checks totaling $119 million to WellPoint’s former chairman, Leonard D. Schaeffer.
Tribune’s plan was unusual, Bottano said, for allowing executives to trigger the payments themselves if they stay on after a change of control and leave voluntarily a year later.