Global Crossing Offers Bonus Plan
Global Crossing Ltd. sought court approval Thursday for a plan that would pay key executives a total of up to $15 million in bonuses this year, while noting that it still will cut 16% of its remaining work force as it refocuses its communications business on existing customers.
The so-called retention plan, worked out with banking creditors and the unsecured-creditors committee, would pay nine executive vice presidents bonuses of up to half of their annual salaries and 295 other high-level executives up to 27.5% of their pay.
Creditors and other parties in the nation’s fourth-largest bankruptcy case have until May 3 to file objections. But the leader of a shareholders’ bid to take over the company pointed out that everyone is essentially forced to accept the deal.
“Because they’re in Chapter 11, they can’t hold the company together” without a bonus plan, said Kennon A. Brennon, who heads a New York City investment firm proposing a shareholder takeover. “This is just throwing good money after bad,” he said. “It’s taking care of elite executives, and they’ve been well taken care of already.”
The Bermuda-based operator of a worldwide fiber-optic cable network is revising its business strategy to focus on serving existing customers rather than on growing the company. In March, Global said it would fire more than 1,600 employees. So far, it has reduced its work force to about 5,000 and it soon will shed 813 more workers.
The company said in its filing that the dismissals and its financial failure are adversely affecting its ability to keep key employees, particularly managers and corporate executives. The company said it “cannot afford to lose the special knowledge, experience and skills” of those employees.
Under the retention plan, executives already deemed to be key to the company’s business and restructuring effort would share $10million in bonuses, to be paid in four installments--three this year and the fourth whenever a reorganization plan is filed or, if it happens earlier, when the company’s assets are sold. The latter may occur this year as well.
A $5-million pool would be created to retain employees who are or become essential to the reorganization effort, a determination to be made by the company’s chief executive, John Legere, who will not participate in the retention or bonus plans.
A company spokeswoman said the creditors committee also approved a reworked pay package for Legere of up to $10.9 million in salary, possible bonus and other benefits this year.
