December 14, 2018 Read More →

Creditors, workers challenge Mission Coal bankruptcy bonuses for top brass

S&P Global Market Intelligence ($):

Unsecured creditors and the unionized workforce of Mission Coal Co. LLC filed objections to two incentive programs the company proposed to retain employees during its bankruptcy sale process

Mission Coal asked the U.S. Bankruptcy Court for the Northern District of Alabama to approve two plans on Nov. 28: a key employee incentive plan, or KEIP, and a key employee retention plan, or KERP. The KERP is a $1.1 million proposed incentive program that Mission said is designed specifically to retain 40 “critical non-insider employees” through the reorganization, while the KEIP provides up to $281,875, depending on certain sales metrics, to encourage two senior members of management to meet “challenging sale-related process and pricing goals.”

A committee of Mission’s unsecured creditors wrote in a Dec. 12 filing that they do not object to the broader KERP program, but do object to KEIP bonuses they said are unnecessary and duplicative of pre-petition bonuses that were paid to the same two executives on the eve of the company’s bankruptcy. Just two days before the petition date, the unsecured creditors wrote, Mission doled out $1.5 million in bonuses to three top executives, including the two who would benefit from the new program: Gary Broadbent, the general counsel and vice president of human resources, and Vice President of Accounting Alan Jones. 

“The proposed KEIP does not properly incentivize the debtors’ executives to achieve significant value-enhancing performance during the pendency of these Chapter 11 cases,” attorneys for the unsecured creditors wrote. “Moreover, the proposal to reward two executives who each received payments of $365,000 a mere two days before the petition date is unseemly, at best.”

The United Mine Workers of America, or UMWA, the union representing some of those employees, said it was not consulted in the design of the retention plans and urged the rejection of both of the proposed programs.

More: ($) Mission Coal sees backlash from workers, creditors over incentive programs

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