Human Capital & Careers

Judge: Bankrupt Co. Can Hike Pay to Keep Talent

Under the new bankruptcy law, the copper-mining corporation had to prove that the payments were needed to prevent key people from leaving for compe...
Stephen TaubJune 5, 2007

Asarco LLC received U.S. Bankruptcy Court approval to pay as much as $11.3 million in extra wages and bonuses to retain employees, according to the Associated Press.

Under the new bankruptcy law that went into effect more than a year ago, the copper-mining corporation had to prove to the court that the payments were needed to keep key people from leaving for competitors.

Judge Richard S. Schmidt of the U.S. Bankruptcy Court in Corpus Christi, Texas, ruled on Monday that the company, which has been in Chapter 11 since August 2005, can raise salaries by a total of as much as $7.8 million and pay up to $2.6 million in incentive bonuses, according to the report.

The judge also gave the company permission to create a $900,000 pool of discretionary bonuses. Asarco claims that it has lost more than 122 skilled employees since January 2006, many of them to competitors, according to AP. Since November alone, rival BHP Billiton has lured six Asarco employees.

Soaring metal prices have driven the demand for experienced workers, according to the AP. “People are giving signing bonuses that are in excess of what our retention program is,” Asarco chief executive Joseph Lapinsky reportedly said at a court hearing in April 2007.

Currently a unit of Grupo Mexico SA, Asarco filed for bankruptcy to reign in about $6.5 billion in environmental liabilities, the news service reported. The company also faces 95,000 asbestos-related claims that could total more than $2 billion.