Tribune to Terminate ESOP
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.