Tribune seeks court’s OK for bonuses

Tribune Co. asked the judge in its bankruptcy case for authority to pay management bonuses for 2011 ranging from $16.4 million to $42.5 million.

The potential payments, which are slightly lower than those requested last year, would be made to 640 management employees based on how much operating cash flow the company generates this year, relative to a plan approved by the board in February, court documents showed Wednesday.

Tribune, which is waiting for U.S. Bankruptcy Judge Kevin Carey to decide between two competing plans for restructuring the company’s balance sheet before it can emerge from bankruptcy court, said in January that it generated $635 million in cash flow last year.

But in February, it cut its forecast for 2011 cash flow to $497 million, reflecting an expected drop in political advertising as well as diminished performance by its newspapers, sources said.

Tribune owns the Los Angeles Times, KTLA-TV and other media properties.

The company must reach 91% of its cash flow goal, or $450 million, for management to get $16.4 million in incentive bonuses under the proposed plan. The potential payout increases in stages to a maximum of $42.5 million if the company generates $700 million in 2011 cash flow.

Last year, Tribune’s $635 million in cash flow matched its maximum goal, triggering authorization of $42.9 million in management payouts. This year, Tribune has been weighed down by its publishing division, which, along with the rest of the industry, has seen sharp declines in advertising revenue, triggering layoffs.

The bonus request has the support of the company’s senior creditors and the Official Committee of Unsecured Creditors in the case, documents said.

The court will take up the request at a hearing scheduled for Oct. 4.

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mdoneal@tribune.com