Attorney suing Tribune cites pension risks
Philip L. Gregory, who filed a class-action suit in September charging mismanagement of the employee stock ownership plan that was created to help fund the acquisition of the company, said an annual payment to the ESOP on behalf of the company’s workers remains in limbo as a result of Monday’s bankruptcy filing.
The payment, which was supposed to be made in the first part of 2009, would be equal to 5% of the annual pay of the employees covered in the plan in 2008. Based on my estimate that annual compensation averages $75,000 for the company’s 18,000 employees, the sum in question would appear to be approximately $67 million.
As a result of the bankruptcy filing, it is not clear whether the payment will be made, said Philip. If the payment were made, however, it would be for naught, because “the ESOP will have zero value going forward,” he said.
Because the employee contribution to the ESOP had not been funded prior to the bankruptcy, the Wall Street Journal concluded this morning that Tribune's workers “emerged largely unscathed.”
But Philip takes issue with that.
“While employees have not lost anything because no contributions were made yet to the ESOP, they all worked for the last year on the assumption that a certain percentage of their salary would be contributed to the ESOP,” he said. “If no contributions will be made, then they will have lost the value of that pension contribution.”
While the portions of his lawsuit directed at Tribune Co. will be stopped by the bankruptcy action, Philip said he intends to go “full speed ahead” with his challenge to GreatBanc Trust Co., the trustee designated to manage the ESOP on behalf of the employees.
The complaint filed in federal court in California accuses the trustee of failing to exercise proper fiduciary responsibility in representing the interests of the employees.
Despite three requests for comment on this post, Tribune spokesman Gary Weitman had no immediate comment on the concerns expressed by the attorney. But he did object to the publication of the post, saying in an email:
“You just gave this guy a platform and offered no analysis or counterpoint to what he said. Come on. The WSJ ran a considered story that examined the facts and analyzed the retirement plans. This guy clearly has an agenda and you just helped him further it, just because he ‘said it.’ So much for journalistic integrity. You should be ashamed.”