Journal Register Shut-Down Bonuses? Not on His Watch

By: Mark Fitzgerald Connecticut Attorney General Richard Blumenthal told the alternative New Haven Independent Monday that he intends to intervene in the Journal Register Co.'s bankruptcy case, to block bonuses for key executives that are tied to cutting staff and closing newspapers.

"These bonuses seem unnecessary and excessive given the apparent financial failure of the company," Blumenthal said in an article posted on the Independent's Web site. "It certainly has the appearance of rewarding failure. They're closing newspapers and laying off employees."

In its bankruptcy filing Saturday, Yardley, Pa.-based Journal Register included a motion asking the court to pay bonuses to some 31 key executives -- not including Chairman and CEO James W. Hall -- if they achieve certain goals of a business plan drawn up by the chain and its creditors.

The bonuses are tied to reducing headcount and liquidating or shutting some newspapers, according to the motion. The goal, it said, is to increase liquidity and debt recovery for creditors.

Journal Register's motion said the plan had been vetted and approved by its creditors. Bonuses would be approved by the creditors committee CEO and the "chief restructuring officer" who joined the company last year at the creditors' insistence.

Some $450,000 in bonuses has already been paid out, the company said. Journal Register said the 31 executives accomplished one of two "significant headcount reductions" under the business plan by Dec. 31.

"At that time, thirty-one Key Employees were paid their first scheduled bonus in the aggregate amount of approximately $450,000," the motion said. "Under the MIP (Management Incentive Plan), if additional reductions in force are completed on or prior to March 31, 2009, the Key Employees will be entitled to an additional bonus, which may total approximately $486,000, with an average bonus of $15,700 per Key Employee."

Journal Register's vice president of finance, Gary Streuning did not immediately return phone and e-mail messages seeking comment.

More details of the shutdown bonuses are posted at E&P's business-oriented Fitz & Jen blog.