Bankruptcy court approves Tribune bonus payments

WILMINGTON, Del. Jan 27 (Reuters) - Bankrupt media company Tribune Co TRBCQ.PK can pay about $45 million in bonuses to hundreds of managers, the largest such payment in at least 12 years, after a judge overruled union objections on Wednesday.

The owner of the Chicago Tribune and Los Angeles Times as well as more than 20 television stations will begin paying the bonuses next month to as many as 720 senior employees as part of its annual incentive plan.

The Washington-Baltimore Newspaper Guild opposed the payments, which it said rewarded declining performance at a time when the company had frozen salaries for most staff.

Judge Kevin Carey approved the plan, rejecting arguments that bonuses should not be paid entirely in cash and that many of the targets were already met when he held hearings on the issue in September.

"I concluded that here the evidence shows there is a reasonable relationship between the plan and enhancing the company's chance of survival," said Carey.

He said the company's newspapers were cash flow positive and performing well compared to competitors.

The union said the payment will equal roughly 10 percent of operating cash flow. By that measure, the bonus is three times larger than the 1997 bonus pool, which is the next largest in terms of operating cash flow over the past 12 years.

"There has never been a MIP (management incentive plan) like this one," the union wrote in their objection to the bonus. "An unprecedented payout of millions of dollars to a smaller number of executives during a year in which employees' salaries were frozen to 'share the sacrifice' and there was an historic low in operating cash flow."

The company had argued it needed the payments to avoid demoralizing key staff and to align performance with the objectives of the company.

The company first argued for permission to make the payments in September. At that time, it also asked for permission for two other bonus programs worth up to about $20 million combined that focused on the performance of approximately the top 40 executives.

Last week, the company asked the court if it could pay bonuses to the larger pool of managers while postponing a decision on the two smaller programs for top executives.

Carey said at the hearing that his decision on the two other programs would "remain in the queue" and suggested they might be folded into a plan of reorganization.

The case is in Re: Tribune Company et al, U.S. Bankruptcy Court, District of Delaware, No. 08-13141. (Reporting by Tom Hals. Editing by Robert MacMillan)