HBC Petitions Bankruptcy Court for Executive Bonuses
On July 13, Hawker Beechcraft filed a request with the U.S. bankruptcy court requesting permission as part of the restructuring to grant bonuses to most of its “senior leadership team” (SLT, see below).
The incentive bonuses under the key employee incentive plan (KEIP) could total as much as 200 percent of each individual’s base salary; however, the filing makes clear that the bonuses are based on the achievement of certain incentive goals.
The maximum payment under KEIP is dependent on meeting specific targets under the Standalone Transaction Award and Third Party Transaction Award requirements. For example, if the court-approved third-party transaction results in a purchase price less than the original offer of $1.79 billion, the bonus award would decrease by 25 percent of each SLT member’s base salary for each $100 million below $1.79 billion.
The maximum payout under the Standalone Transaction Award plan, “payable only if ‘stretch’ goals are achieved,” would total $5.328 million in incentive payments.
The HBC senior management team, said the filing, “will play an indispensible role in the performance of business over the next few months, which will drive the overall outcome of the standalone transaction or the third-party transaction.” The SLT bonuses, it continued, recognize the key roles senior management will play in restructuring efforts and operation performance.
The plan also allows HBC to give retention bonuses under the key employee retention plan (KERP) to approximately 30 other members of management determined as “vital to Hawker Beechcraft’s business and reorganization.” The individuals work across various departments, including operations, engineering, customer organization, finance, human resources and legal.
Robert Miller, the turn-around expert hired in March this year as the new CEO, stated in a separate filing that because he is not a participant in the employee incentive plan or the non-insider employee retention, he would receive no payments under either the KEIP or KERP plans.
According to a Hawker Beechcraft representative, incentive bonus plans are typical in bankruptcy proceedings.
Hawker Beechcraft Senior Leadership Team
• Bill Boisture, chairman
•William Brown, executive vice president, global operations
• Sharad Jiwanlal, vice president of human resources
•Heidi McNary, vice president of engineering
• Alexander Snyder, vice president and general counsel
•Christi Tannahill, senior vice president, global customer support
•Karin-Joyce Tjon Sien Fat, CFO
•Shawn Vick, executive vice president of customers