Witness To An Execution
Not sure if that headline refers to Sun-Sentinel courtrs reporter Tonya Alanez getting lined up to view the potential state's offing of John Marek (see this excellent JAABlog post for details) or the slow-motion assassination of the newspaper industry's future.
On the latter point, I give you retired Sun-Sentinel reporter Joe Kollin, who details how employees' nest eggs were cracked and eaten to help finance Sam Zell's purchase of Tribune (and pay former executives obscene amounts of severance money). Here's Kollin's informed take, inspired by John de Groot's recent post.
Hold it! Stop the presses! You can't talk about the selfishness of Dennis FitzSimons and his friends without mentioning how they screwed every Tribune employee when they negotiated the company's sale. Rather than keep their promise to fund employee 401k plans, they quietly diverted company money to pay themselves.
Remember, the company's benefit package in 2006 and 2007 included two types of contributions to the 401k plans. In 2006, the company put the equivalent of 7 percent of our pay into each plan. Of that 7 percent, 4 percent was placed into our accounts every payday during the year; we could look online to confirm the company was keeping its promise. The remaining 3 percent, called profit sharing or cash balance, was to be put into our accounts as a lump sum at the beginning of the following year, 2007. Despite the company's finances, we got the money in February 2007 as promised.
The 2007 plan was split a similar way. The company promised us a total of 6 percent of our pay (I can't swear to the percentage). It put 3 percent (I think) into our 401k plans every payday as promised. The remaining amount, about 3 percent, was to be put into our 401k accounts in early 2008.
Along came February 2008 and the money wasn't put into our accounts. Employees began asking why. It turned out, we were told, that Fitz & Friends rescinded the 401k contributions as part of the terms of the sale even though they managed to find company money to pay themselves the millions that deGroot mentions.
The official company reason given for reneging on the promise was financial problems. The company also may have said that the promised 3 percent was profit-sharing and there wasn't enough profit to pay us, but I don't recall that being used as an excuse.
Zell, at one of the town hall meetings, reportedly said he wasn't aware that the 401k contributions had been cancelled and to show what a good guy he was, said he would try to make good on the original promise to pay us. He found money to do that in the overfunded employee pension plan. He said the plan had a surplus and he raided it to get enough to give each employee 2 percent (I'm sure of that figure, which was only 1 percent less than promised, so it wasn't too bad for us.
The pension fund, of course, contains employees' money, not company money, so it didn't cost Sam anything. And although the pension fund was over-funded then, what would happen if the economy crashed and the value of the fund's investments decreased. Oh, that happened, didn't it. Since then, Sam has also taken severance pay for terminated employees out of the employee pension fund. I don't believe it is overfunded now.
So, don't talk about all the money Fitz & Friends took from the company without mentioning how they got -- by showing complete, utter, arrogant, callous and total disregard for the employees who worked to earn that money for the company.
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