What’s up with our legal system? A bankruptcy judge just told the bankrupt Tribune Co. it could go ahead and pay $13 million in manager bonuses, but denied payment of $2 million in severance to 70 employees (average tenure 20 years) who were laid off just before the bankruptcy last December. The reasoning? Tribune needs to keep its "best and brightest" managers. Echoes of AIG.
"We need to motivate and incentivize the key people who will implement
change," said Tribune’s chief financial officer. "These are really good people we’re talking
about. They’re the best and the brightest of the company."
The CFO also made a weaker plea for paying the severance, but the judge spurned the request.
As someone with a lot of friends still or formerly at the Tribune-owned LA Times, here’s some news for the judge: No "bright" Tribune manager with a decent job offer is pausing because of a bonus. More will leave when the bonus is in hand. And the talented people who were laid off 6 months ago are struggling to stay housed or keep a kid in college. Several thousand bucks of earned severance is a make-or-break amount for many of them.
The $454 millon in bonuses at the failed AIG also got paid on legal advice that such bonuses had to be paid. I don’t know what happened to the secretaries and clerical staff who got laid off at AIG. But at Tribune and AIG, we see deafness to justice by those who are supposed to uphold justice.