UPDATE: Hawker Beechcraft’s executive pay plan still under review
02/19/2013 6:03 AM
08/05/2014 8:18 PM
NOTE: An earlier version of this story incorrectly stated that a bankruptcy judge had ruled on motions regarding executive pay for Hawker Beechcraft employees.
A federal bankruptcy judge has still to rule on Hawker Beechcraft’s Key Employee Incentive Plan, which grants up to $5.3 million in bonuses to eight senior executives.
The Machinists union and a federal agency that acts as a bankruptcy watchdog had both opposed the pay plan.
If the judge approves the plan, the bonuses to be paid if the company consummates a plan to stand the company up as it emerges from bankruptcy by Dec. 15 or closes a sale of the company before Jan. 15.
On Thursday, the judge approved an additional $1.9 million in bonuses for 31 other management-level employees in a Key Employee Retention Plan.
Hawker Beechcraft filed for Chapter 11 bankruptcy May 3.
Earlier this month, the court approved an exclusivity agreement with Superior Aviation Beijing so Hawker Beechcraft could pursue a sale of the business to the Chinese company for $1.79 billion. The sale would not include the defense business.
The company defended its proposal for the bonuses, saying the payments are appropriate because there is significant work to do before the company emerges from bankruptcy and called its senior leadership team a “highly talented and capable group.”
Pursuing a proposal to sell the company to Superior involves obtaining multiple regulatory approvals, carving out the defense business, negotiating with key parties to preserve important business relationships, responding to diligence requests, drafting and negotiating a definitive purchase agreement and, if an agreement is reached, conducting a competitive auction to try to get a better deal or offer, the company said in a court filing last week.
At the same time, the company must plan to emerge from bankruptcy as a stand-alone company.
That will require securing support for the plan from creditors, resolving the treatment of the company’s three defined benefit plans, negotiating the terms of a new retirement plan and getting commitments for financing to emerge from Chapter 11.
It also means doing an “orderly shut down” of the business jet business, which will require facility closures and work force reductions, last week’s filing said.
The Machinists union, in a filing opposing the payments, said it won’t lose sight of the “complete irony and hypocrisy” of a motion that seeks to give millions in bonuses to executives as the company struggles to survive.