Newspapers put up $4 million of Canwest retention bonuses
Canwest’s newspaper division is paying $4 million of the $10 million in “retention bonuses” going to “three management directors, four key executives and 13 other key employees” as part of the bankruptcy protection filing by the company’s television division.
This and other tidbits of information have been gleaned by reading the documents filed in the Ontario Superior Court of Justice as part of the proceedings under the Companies’ Creditors Arrangement Act (CCAA). The documents can be found online at http://cfcanada.fticonsulting.com/cmi/.
The justification provided to the court for the newspaper division putting $3,946,022 into a trust fund to pay bonuses to already highly paid individuals is “because of the independent nature of the debt structure utilized by CMI and the Limited Partnership, this CCAA filing has necessitated a division between the CMI Entities and the LP Entities. Since all Senior Management KERP Participants and certain of the Management KERP Participants and other Key Employees have provided, and will continue to provide, services to both the CMI Entities and the LP Entities, it is appropriate to provide for a fair sharing of the cost of the KERPs between the CMI Entities and the LP Entities. … This is more cost effective than establishing two parallel structures.”
This discussion of the “Key Employee Retention Plan” certainly makes it sound as if the newspaper division will soon be following the television side of Canwest Global into CCAA.
The overall justification for the “KERP” itself seems to imply that the loyalty of senior managers is simply a case of money. “The three Senior Management KERP Participants are seasoned executives in corporate and banking affairs, together with the broadcasting and publishing industries. It is likely that the Senior Management KERP Participants will consider other employment options if the Senior Management KERPS are not granted and secured by the KERP Charge.”
In other words, the three management directors, four key executives and 13 other key employees require bonuses ranging from 50% to 150% of their already very high base salaries to remain with Canwest. Twenty employees will share bonuses worth just under $10 million, plus their regular big pay cheques, to keep them working at their jobs.
Incredibly, these types of bonuses for executives are a “normal” part of the CCAA process, just as workers losing their promised severance payments or retirees having their pensions cut are also nothing out of the ordinary.
In that regard, another piece of information from the CCAA filings is that the 11 defined benefit pension plans for Canwest television and National Post employees suffer a combined wind-up deficiency of $32,824,146. Based on previous CCAA cases the approximately 1,500 affected individuals can expect a long legal battle before the fate of their pensions is clarified.
Other tidbits from the court documents:
Canwest Limited Partnership (the newspaper divsision) has been owned by a numbered company, 4501071 Canada Inc, since Oct. 5, 2009. This was done “to give greater flexibility and certainty to both CMI and the Limited Partnership in light of the fact that the recapitalization of the CMI Entities is not occurring at the same time as the recapitalization or restructuring of the LP Entities.”
As of 2008 the Canwest “CCAA Entities” owed “other post-employment and post-retirement benefits” worth $16.7 million. “The CCAA Entities do not intend to continue making payments in connection with the post-employment and post-retirement benefits or termination and severance payments or benefits being paid to previously terminated non-unionized employees or retirees after the commencement of the CCAA proceedings.”
All of this is food for thought as Local 2000 members wait to see what happens to Canwest’s newspaper division.
Gary Engler
This entry was posted on Tuesday, October 13th, 2009 at 6:02 pm and is filed under Local News.
