The top eight Hawker Beechcraft executives got a denial of up to $5.328 million in bonuses and a bit of a tongue lashing from United States Bankruptcy Judge Stuart M. Bernstein. The judge said it looked to him like the money was a retention payment, and that’s not allowed under bankruptcy laws. He is based at the United States Bankruptcy Court for the Southern District of New York.
The money would have gone to the Hawker Beechcraft chairman, vice president of operations, vice president of human resources, vice president of engineering, executive vice president and general counsel, senior vice president of global customer support, chief financial officer, and executive vice president of customers. Congress specifically passed a law to prevent bonuses to “insiders” such as top executives for staying with a company through a bankruptcy process. The bonuses were to be awarded if financial goals were met and if the proposed sale to a Chinese businessman closed at $1.79 billion. Bonuses were to be reduced but were still to be awarded at a reduced level if the final deal closed for at least $1 billion.
“The debtors are fond of basketball analogies and argue that the [financial] targets are not ‘lay-ups,’” Bernstein wrote. “That may be so, but they are more like free throws than half-court flings at the buzzer.”
The judge expressed his opinion that a retention program was intended. “…when viewed as a whole, it [the incentive plan] sets the minimum bonus bar too low to qualify as anything other than a retention program for insiders.”