Tribune Co. ESOP to be Terminated
November 4, 2009 (PLANSPONSOR.com) - In a memo to
Tribune Co. employees announcing a new retirement plan, Chief
Administrative Officer Gerry Spector said the company's
Employee Stock Ownership Plan (ESOP) likely will be
terminated when the Chicago-based media conglomerate emerges
from bankruptcy.
According to the Chicago Tribune, the memo said the
company will set up a new 401(k) plan that will provide a
4% match for employee contributions of up to 6% of pay. The
company also said it will institute a profit-sharing plan
with a discretionary contribution that will "maintain a
connection between company profitability and employee
incentives."
The newspaper said the announcement answers the question
of whether employees would end up getting a piece of the
reorganized company, and that eliminating the plan suggests
that Tribune Co. management and the company's creditors
decided that the complexity of keeping the ESOP in place
was more costly than paying taxes.
However, the U.S. Department of Labor has been
examining aspects of the ESOP under provisions in the
Employee Retirement Income Security Act (see
DoL Subpoenas Tribune on ESOP
). The stock plan was an important piece of real estate
mogul Sam Zell's plan to acquire the company in an $8.2
billion deal that involved $13 billion in debt.
Rebecca Moore
editors@plansponsor.com