The Official Committee of Unsecured Creditors has come out against $20 million in proposed bonuses to executives at bankrupt RG Steel, owner of the Sparrows Point steel mill.
The committee, which includes suppliers, the United Steelworkers union and Pension Benefit Guarantee Corp., said the plan to pay the bonuses to 10 senior managers as an incentive to sell the company by the end of the year “stands to provide outsized rewards to the participants, even if their efforts do not produce a going-concern sale of any part of the business.”
The committee said it tried to reach a compromise incentive plan and “as recently as [Monday] morning, the committee was hopeful that an agreement had been reached among the parties.”
But unable to strike a deal with RG management led by John Goodwin, the committee said it would join U.S. Trustee Roberta DeAngelis in opposing the incentive plan.
“Substantially in Excess”
The committee’s lawyers, led by Teresa K.D. Currier, said they were prepared to demonstrate that the incentive plan “would reward its beneficiaries at levels that are substantially in excess of incentive programs in comparable bankruptcy cases, likely higher than the [executives’] aggregate compensation for the entire previous year, and far greater than compensation levels for senior executives at profitable, publicly owned steel companies.”
The committee worried that the bonuses would be rewarded even if Sparrows Point and other RG mills were “relegated to quick liquidation sales at the minimum realistic values.”
A hearing on the proposed bonuses is scheduled tomorrow before U.S. Bankruptcy Judge Kevin J. Carey in Delaware.