From: Tribune Communications
Sent: Tuesday, November 03, 2009 12:02 PM
Subject: Message from Gerry Spector/Retirement Plan Changes
As we move into the fourth quarter and the end of the year approaches, we wanted to update you on some recent developments with our retirement plan and talk about the changes we’re planning for 2010. Tribune’s current retirement plan, implemented shortly after our going private transaction closed, is made up of a 401(k) plan, a cash balance benefit and the Employee Stock Ownership Plan (ESOP).
Obviously, a lot has changed in the last two years: The economy went into recession, the investment markets became extremely volatile and we filed for Chapter 11 protection. Given these developments, as well as our commitment to help you provide for your retirement and share in the company’s long-term success, we are redesigning our retirement plan.
The cornerstone of the redesigned plan will be the 401(k) Savings Plan, which will be enhanced with a company match, and a discretionary profit-sharing contribution tied to our financial performance. The redesigned plan will be implemented January 1, 2010; the changes are outlined below:
The 401(k) Savings Plan will be enhanced in two ways.
§ A company matching contribution — If you contribute 6% of your eligible pay each calendar year, the company will provide total matching contributions of 4%. The first 2% of eligible pay you put into the 401(k) will be matched dollar-for-dollar, and the next 4% will be matched at $.50 on-the-dollar. Tribune’s current investment fund line-up will remain in place.
§ A profit sharing allocation — The plan provides for an annual discretionary profit sharing allocation which will be tied to the company achieving budgeted financial targets. If a profit-sharing allocation is made, all eligible employees will receive it, regardless of whether or not they contribute to the plan.
The ability of the company to provide these contributions is not impacted by our Chapter 11 filing.
In an effort to help employees increase their retirement savings, we are implementing two new features for those contributing 3% or less to the 401(k) Savings Plan:
§ Auto-enrollment — Employees currently contributing less than 3% to the plan automatically will be enrolled to contribute 3% of base pay to the plan on January 1, 2010. Employees may opt-out or change this contribution at any time.
§ Auto-escalation — To take full advantage of the plan, anyone currently contributing 3% or less will have their contribution automatically increased 1% annually beginning January 1, 2011, until a contribution of 6% is achieved. Employees may also opt-out or change this feature at any time.
Note: If you already contribute more than 3% to the 401(k) plan, you will be unaffected by either of these new features and do not need to take any action to continue contributing at your current level and receive the company match.
The ESOP — When Tribune became a private company, one of our primary goals was to create a culture that would enable employees to share in the company’s long-term success. That was a major reason for creating the ESOP. While we do not expect the ESOP to continue once the company emerges from bankruptcy, we still strongly believe that employees should share in the company’s long-term success. The profit sharing allocation in our 401(k) Savings Plan described above is intended to maintain a connection between company profitability and employee incentives.
When we emerge from bankruptcy, we expect that the shares of Tribune stock held by the ESOP will be extinguished and the plan terminated. Duff & Phelps, a nationally recognized appraisal firm, recently determined that as of December 31, 2008, the value of a share of Tribune Company stock held by the ESOP was $0. Nonetheless, in keeping with the plan provisions, the company has made the initial allocation of shares to the accounts of eligible employees. You will receive a letter in a few weeks reflecting this valuation and informing you of the number of shares you were allocated, as required by the plan.
The Cash Balance Pension Plan — The company will make a 3% allocation to the cash balance accounts of eligible employees for the 2009 plan year; this allocation will be made in the first quarter of 2010. However, with our redesigned plan, the allocation for 2009 will be the last. After this final allocation, cash balance accounts will be frozen, though they will continue earning interest. In the coming weeks, Hewitt will send you a packet of information outlining the details of the plan. In the meantime, feel free to contact the Hewitt Retirement Center at 800/872-2222 (option 1).