Thursday, March 29, 2007

You want to use MY money to fund YOUR Tribune purchase???

You've told us you want to know if the new owner(s) — Zell?, Burkle and Broad? — can divert your pension, your 401k or any future company 401k matches to it's Employee Stock Ownership Plan— whether you like it or not?!? Well, it IS a bit complicated, but we've looked over our expert's report and gleaned from it this:

1. Pension plan trustees – distinct from 401(k) plan trustees – have to agree to invest in an ESOP, so a new owner alone CAN NOT unilaterally divert money from a defined benefit pension fund. If they do, the limit is 10% of the assets of the pension plan.
2. A new Tribune owner can't divert (past) accumulated 401k money to the ESOP, but it CAN divert future company contributions to an ESOP. However, after you receive the required financial and future business plan info to evaluate an investment in the "new Tribune", you can choose to make your own decision about how much of your accumulated 401k $$$ to divert to the ESOP.
3. A new owner can replace or reformulate the existing 401k, but it has no control over the funds YOU contribute and how its diverted — past, present or future. The new owner only has diversion discretion over its "new" 401k contributions.
4. A "new Tribune" ESOP can be installed without voluntary contributions. The fact is, you may or may not be invited to make voluntary contributions.


Administrators said...

Regarding Defined Benefit pension plans: "New Tribune" would have to get the approval of the Trustees to invest pension money. Legally, Trustees have a fiduciary responsibility to do what is best for the plan, but Trustees are hired by Management. It would be good to know who the Trustees of the Tribune pension plans are and what condition those plans are in.

Additionally, in our "Considering Ownership Alternatives at Tribune Co. FAQ – Volume 2", under #1, the third paragraph will be amended to read "No diversions of current or accumulated defined benefit pension plan assets can be made by the "new Tribune" to an ESOP or any other financial vehicle without the agreement of the trustees of the Baltimore Sun-Tribune pension plan. Given the priority trustees assign to diversification and modest risk, it seems unlikely that the trustees would agree to divert a significant percentage of current or accumulated pension plan assets to an ESOP."

Anonymous said...

Given the fact that Tribune, unlike say some of the airlines, is not now in danger of bankruptcy and that the sole purpose of the sale seems to be to give the Chandler heirs more money, would pension trustees who chose to invest even 10 percent of the pension funds in the new and perhaps risky Tribune venture be subject to any sort of legal action for not acting in the best interests of those with a stake in the pension plans?