There may be more than 3,000 steelworkers without jobs in Maryland, West Virginia and Ohio, but CEO John Goodwin and his top lieutenants have a good chance of becoming millionaires from the bankruptcy of RG Steel.
Late this afternoon, U.S. Bankruptcy Court Judge Kevin J. Carey authorized up to $20 million in bonuses for 10 managers of RG Steel led by Goodwin, president and CEO of the company since its formation in March 2011.
The bonuses are not guaranteed, but are contingent on the sale of the steel company – or the liquidation of its assets – at prices that satisfy the company’s senior creditors, headed by Wells Fargo Capital Finance and General Electric Capital Corp., and meet other criteria.
Judge Carey batted aside objections to the bonus pool by both U.S. Trustee Roberta DeAngelis and the Official Committee of Unsecured Creditors, which includes the United Steelworkers union, suppliers and the Pension Benefit Guaranty Corp.
Names of Bonus Participants
RG Steel revealed the names of the 10 managers who would participate in the bonus pool. The percentage of the bonus pool allocated to each executive was redacted, or kept hidden, in the court filing.
Besides Goodwin, the executives eligible for bonuses are: Rich Caruso, chief financial officer; Dave Pryzbylski, chief administrative officer; Mark Whalen, chief operating officer; Jerry Nelson, chief commercial officer; Jeff Gennuso, comptroller; Howie Japlon, general counsel; Glen Mikaloff, general manager of Sparrows Point; Tom Cera, general manager of Warren and Wheeling; and George Lukes, vice president of quality assurance.
Judge Carey approved the exceedingly complex bonus plan set up by RG Steel and its principal owner, New York billionaire Ira Rennert, which depends on cash set aside in such categories as a bonus pool, “going concern bonus” and “non-going concern proceeds.”
Essentially, the bonuses will kick in after the senior lenders are paid following the sale or liquidation of the steel company. In addition to Wells Fargo and General Electric, the senior lenders include UBS Securities, Bank of America and Merrill Lynch.
Also to be satisfied before the distribution of bonuses are the junior lenders, led by Cerberus Business Finance, which entered a junior credit agreement with RG Steel last January 17, and The Renco Group owned by the Rennert family.
The bonus pool payable to the 10 executives could be as much as $20.275 million, according to U.S. Trustee DeAngelis, who is responsible for administrative oversight of the case.