Picture this: Bankrupt Kodak wants to give $13.5 million in bonuses

[IDemo]

Source: msnbc.com

Eastman Kodak Co. has filed a request with the district court overseeing its Chapter 11 bankruptcy asking for permission to pay around $13.5 million in bonuses to approximately 300 employees to keep them on board during and after the restructuring.

This pay-to-stay practice was ostensibly quashed by bankruptcy reform legislation years ago. But the onetime imaging giant wants the court to grant an exception. It contends that these employees are critical to the company's turnaround and will quit without the incentives.

Historically, the problem with big bonuses in bankruptcy was that conferring them often came at the expense of rank-and-file workers. In 2001, Polaroid filed for bankruptcy and eliminated severance and insurance payments — then turned around and gave top brass $4.5 million in bonuses. Congress made changes to the corporate bankruptcy code in 2005 aimed at preventing this kind of lopsided treatment of executives and ordinary workers, but Kodak wants an exception.

In court documents, the company argues that because the portion of executives' compensation consisting of company stock had become nearly worthless, these employees had taken what amounted to a pay cut by continuing to work there. Without the bonuses, it contends, these workers are likely to be poached by competitors who can offer them more money, and finding people with the knowledge and skills to take their places will be time-consuming and expensive.

Read more: http://bottomline.msnbc.msn.com/_news/2012/04/09/11102175-picture-this-bankrupt-kodak-wants-to-give-135-million-in-bonuses?lite

[HooptieWagon]

1. Hmmm. If they had done their jobs competently, maybe their stock options would be worth something.

[pscot]

16. In fairness

Kodak was steamrolled by the digital revolution. Have you bought a roll of Kodachrome lately? They tried to compete in the digital camera market, but that's not their bag.

[HooptieWagon]

19. I bought a few rolls several years ago before they stopped making it.

Yes, they got steam rolled, but who didnt see that coming? The CEO, and BOD would have to be seriously clueless to not see the digital revolution coming. If they were caught by surprise, its their own damn fault, and they shouldnt get bonuses for being fucking idiots.

[Snake Alchemist]

22. For years my buddy swore that digital would never overtake film because digital would never have the

picture quality. I should add that he is a photographer who now has several high end Canons. Digital of course.

I still remember the arguments.

[frylock]

23. kodak developed (no pun) the digital camera..

so the fact that they were steamrolled by digital photography would point to a lack of vision by those at the top.

[Igel]

2. Yup.

The non-profit I was somehow involved in had the same problem. Deep in the red. We started to restructure and a key person jumped ship. Put a severe crimp in the ability to quickly restructure--he knew the finances, the structure, creditors and partners, what had been tried and what had failed, bylaws and what bits of non-profit law applied to us. We finally got somebody to take over the job, but he took weeks to do what the first guy would have done in a day. Would have been cheaper to have paid him a large bonus.

We quickly worked out a deal with the remaining senior management. They stayed.

This kind of thing can be corruption. It can also be common sense. Hard to know, sitting on the sidelines.

[bluedigger]

3. When I think back to all the crap I learned in high school...

[damyank913]

24. Exactly what I was thinkin...

CHEERS

[KamaAina]

25. For years I thought that was "Mama, dont take my close home..."

"Mama, dont take my close home, Mama, dont take my close home away".

[doc03]

4. I've been through two bankruptcies at our company, that's SOP

to pay a bonus to the people that mismanaged the company to stay on. But the
employees take concessions and get laid-off.

on edit: Just read in the paper today. Wendy's new CEO received a pay package worth $4.6 million for the last four months of 2011. The former CEO received $16.5 million for the first part of 2011 that included $11.3 million in severance pay. Between the two of them Wendy's paid out $21.1 million for CEO pay in 2011. I figure that's about 1400 times what their average employee makes.

[Smilo]

17. It amazes me how people think they are worth that much...........

and really do not do anything to benefit a company to that amount.

If companies looked after their every-day employees a little better - they would be amazed at how successful they could be.

[Odin2005]

5. Jeez, if us peons do a shit job we get fired.

But if a CEO runs his company into the ground he gets a fucking BONUS???

[awoke_in_2003]

9. the american dream in a nutshell. nt

[Blue_Tires]

15. The sad part is it's so commonplace it isn't even news anymore...

[Smilo]

18. You don't even have to do a shit job....... they will get rid of you

so they can "save" money on your salary because the CEO needs another pen.

[MysticLynx]

27. Corporate Vulturism

The new norm in business. Bain Capital excelled at these dirty money grabbing tricks, bankrupt the company then walk out the door with the workers funds.These policies are exactly why so many mortgages are underwater they hyper inflated them, took the money then leave the taxpayer/homeowner to pay for it. Now can someone explain to me how in the world Romney is going to 'fix' our economy? Or is he and his vulture buddies just out to rob the nation of the rest of its wealth before the final crash?

[NBachers]

6. Where do they land when they jump from the ship they sank?

[cstanleytech]

7. I say let them have it....but they dont get it except if they turn the company around.

Set up some goals they must meet in order to earn the cash because why should failure be rewarded?

[JCMach1]

8. They already have that in the form of stock...

[customerserviceguy]

10. Just greasing the skids on the way to extinction

Kodak was destined to go the way of the buggy whip makers.

[sarcasmo]

11. You would think the shareholders would be knocking the doors down.

[tclambert]

12. You just don't appreciate how stressful it is to run a failing business.

And then the terrible stigma they face from people blaming them for the company's ruin, when clearly the blame lies with the pensions for all those retirees, who aren't doing any useful work any more. (Ugh. Paying people for no work!)

These poor executives may lose their careers, you know. Who would hire someone who ran a company into bankruptcy? That's why you have to pay them multi-million dollar bonuses so they won't leave.

And you have to pay them now, because if their turnaround plans fail as badly as their past few years of planning did, then they may not have another chance to make the big money.

A lot of you envious types out there want to brand these executives as failures. Well, are YOU making $13.5 million in bonuses? So what does that make you, huh?

If they can't find a way to corporate success, at least they found a way to personal success.


Now, where's that sarcasm thingy? Ah, here: (You have to click on smilies and then click on the ... to find it.)

[SemperEadem]

13. Let me get this right

you want to give bonuses amounting to $13.5 million dollars to the very people whose mismanagement has landed your company in bankruptcy? Why? So they can do it again once you've got more suckers lined up to throw cash at you?

How about firing those managers, hiring new ones and telling them that their salaries will be tied to how far and fast into the black they get the company without doing fiscal harm to the employees and the company--and if their policies do end up doing harm, they not only do not get said raises, but they get fired and have to pay back what pay they were given? That kind of can of "act right" might work.

[dipsydoodle]

14. It wasn't necessarily mismanagement which brought about their demise

Was more changes in the market specifically to digital cameras.

The fact remains that as is and has been the case with other large corporations it becomes necessary to retain key staff to help ensure that losses do not become even worse for the general benefit of both creditors and share holders.

[Hawkowl]

21. This is the most idiotic argument that people buy into.

Retain key staff? Where else are they going to go? Is there such a high demand for incompetent management that the greedy bastards will flee to greener pastures?

If a bankruptcy court can legally steal employees pensions and slash health care, surely they could force management to stay on until they clean up their mess?

Bankruptcy in America is political tool to destroy the middle class, depress wages, and enrich the wealthy. Bankruptcies are planned the same way ancient armies planned sacking cities.

[Sgent]

26. There are reasons for this....

If a bankruptcy court can legally steal employees pensions and slash health care, surely they could force management to stay on until they clean up their mess?

Nope... that's called slavery and it can only be implemented as a punishment for a felony.

I personally have no problem with firing every CxO in the company, but a lot of employees (say the accountants, IT, salesmen, etc.) -- especially those that are on top of their game and who can easily get jobs -- will run for the hills without some significant assurance that they doors won't be locked when they come to work.

That said, these bonuses don't always apply to the CEO and similar. I once earned 10K in 1 month for staying on to wind up operations at a bk company. My regular salary was about 2k / month.

[Hawkowl]

20. It's the American Way!

Fuck the employees! Fuck the customers! Steal the pensions! Sentence thousands to an early death by slashing health benefits!
Why? Because in America, we must pay the ruling 1%!!!

"Fuck You!!! Pay me!!!" That is the 1% motto.

And our entire legal, and political structure is built to reinforce this fact. We live in a VERY sick society.

[Puzzledtraveller]

28. Well, atleast they didn't ask for a bailout.