Many Tribune Company employees already have a financial stake in the company, holding Tribune stock via their 401(k) plans. Those shares will be cashed out, along with all other Tribune shares, when the company goes private. But going forward employees will have a lot riding on the success or failure of a new Employee Stock Ownership Plan (ESOP) which will be the primary owner of the debt-laden company. In announcing its restructuring, the company sought to assure employees that their existing retirement savings and benefits are safe. For some 37,000 current and retired employees, Tribune says its defined-benefit retirement plan has assets of over 1.7 billion and was overfunded by 200 million as of the end of 2006. The 401(k) plan will continue and two new retirement plans, the ESOP and a "cash balance plan," will be introduced after Tribune Company goes private.
Read the company explanation.
Beginning Jan. 1, 2008, eligible Tribune employees will participate in three retirement plans:
-- ESOP: The newly-created ESOP will be funded solely through company contributions. Those contributions will be invested in shares of Tribune stock (the private company), which will be allocated each year among eligible employees' accounts in the ESOP trust. The first allocation, for the year 2008, will be made in early 2009. The company initially anticipates an annual allocation of approximately 5 percent, based on employees' eligible compensation. GreatBanc Trust Company will serve as the ESOP trustee, and the ESOP will be administered by a board-appointed employee benefits committee.
-- Cash Balance Plan: A cash balance plan will be funded entirely by the company and provide a 3 percent annual allocation to each eligible employee's cash balance plan account.
-- Existing 401(k) Plans: Eligible employees will continue having the opportunity to contribute a portion of their pre-tax earnings to 401(k) accounts.
There will be no change to pension benefits previously earned by employees and retirees. Tribune sponsors defined-benefit pension plans for approximately 37,000 participants. As of year-end 2006, the pension plans had assets of over $1.7 billion and were overfunded by more than $200 million.
"Going forward, employees participating in the ESOP will be invested alongside Sam Zell, one of today's most successful investors. With the additional plans, Tribune employees will have a well-rounded package of retirement benefits," said CEO Dennis FitzSimons.
