Dura Automotive Systems Inc. said creditor opposition to its Chapter 11 bankruptcy plan led it to pull back from requesting bonus payments for four top officers.
CEO Lawrence Denton was one executive who agreed to forgo payments under a six-month bonus plan, to focus attention on the “urgent need” to get bonuses for the other 110 employees approved, according to the Associated Press. The report said that Denton had been in line for a bonus of up to $2.5 million.
While the three other officers and their former bonus amounts were not identified, Dura Automotive lists the four members of its “leadership team” as Denton, CFO C. Timothy Trenary; chief operating officer-automotive group David T. Szczupak; and chief administrative officer Theresa L. Skotak. Trenary, also a vice president, joined Dura last September.
The auto-parts supplier cited “no appreciable progress” in its effort to resolve objections from its unsecured creditors committee, according to AP. Dura is seeking approval to provide incentive bonuses to its 110 top employees, mostly middle and senior managers, who the company deems to be “vital to maximizing the company’s value,” according to the report.
Bloomberg News reported that Dura agreed to reduce the proposed bonus plan for the top managers by $3.3 million, or 39 percent. The new plan would pay $5.2 million to 214 Dura employees, 104 of whom work for units that aren’t in bankruptcy, according to Bloomberg, citing court papers.
According to Bloomberg, Dura is seeking permission to pay $2.7 million to the 104 managers who work for units that aren’t in bankruptcy, and to use $2.5 million from its bankrupt units to pay the other 110.
The company, which filed for Chapter 11 protection in October 2006, asserted the employees’ pay is “well below” what their counterparts at competitors receive. “It is important that these key employees remain engaged and appropriately incentivized to maximize (Dura’s) financial and operational performance,” the company reportedly said in a court filing.
Under bankruptcy law, a company must make the case that individuals are vital to the company in order to award them bonuses.
Denton himself was poised to receive a bonus of up to $2.5 million.
Late last year, Dura postponed its emergence from bankruptcy when it was unable to receive the necessary exit financing.
Last week, Dura received $170 million in debtor-in-possession financing from a group of lenders.