Midway Takes Heat Over Executive Bonuses
It's like a mini-Midway [http://voices.washingtonpost.com/washingtonpostinvestigations/2009/03/bernanke_sought_lawsuit_over_a.html?wprss=washingtonpostinvestigations], which got several earfuls in court from both its creditors and the bankruptcy trustee overseeing its operations over plans to award more than $3.5 million in bonuses to "key employees."
It's been a rough year for the beleaguered publisher, with piling losses, sell off Mortal Kombat [http://www.escapistmagazine.com/news/view/89969], its most recognized and beloved franchise. Despite all that, someone decided it would be a good idea to fork over $3.755 million dollars in bonuses to 29 key employees, a tough sell at any time but particularly galling in the midst of this gurgling toilet swirl we call an economy.
Midway's creditors and bankruptcy trustee therefore headed off to court to express their reservations about the bonuses, which were to be awarded based on three "key steps": Selling the publishing rights to Mortal Kombat [http://www.wheelmangame.com/] franchise or submitting a reorganization plan to the court ($1.3 million) and successfully closing the Mortal Kombat sale or having the reorganization plan approved by the court ($2 million).
There are many problems with this plan, according to everyone who isn't a Midway executive. First, the Wheelman publishing rights had already been sold when the incentive plan was drawn up, leading creditors to say, "The notion that a bonus program designed to reward employees for past accomplishments could be considered an 'incentive' is simply disingenuous." Then there's the fact that the sale of Mortal Kombat and the reorganization of the company are what Midway executives are supposed to be doing right now; it is, in essence, the totality of their jobs at this point. Why should they receive special pay for simply fulfilling the basic requirements of their jobs?
There is also concern over the fact that the second and third "milestones" for bonuses - the sale of Mortal Kombat and/or the submission and approval of a reorganization plan - apparently have no performance-related limitations attached. In other words, they get paid the same regardless of when and how well, or how poorly, they do the job.
And even if bonuses are somehow justified, which I find rather hard to swallow, the trustee claimed the amounts sought by the company are "outrageous," adding, ""The Debtors seek authority to pay bonuses to a selected group of officers and managers which are four hundred percent greater than bonuses paid to the same group in 2008 when the Debtors were not before the Bankruptcy Court."
For what it's worth, Midway executives agreed to revise the bonus plan and submit it to the court for consideration tomorrow. It's reasonable to assume that the amounts will be toned down somewhat but what I'm having trouble understanding is why the bonus plan is being "revised" and not "eliminated." The iconic Midway has been run into the ground and people are being patted on the back for a good job?
Source: The Cut Scene [http://weblogs.variety.com/the_cut_scene/2009/03/feds-creditors-call-proposed-midway-executive-bonuses-outrageous-disingenuous.html]
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It's like a mini-Midway [http://voices.washingtonpost.com/washingtonpostinvestigations/2009/03/bernanke_sought_lawsuit_over_a.html?wprss=washingtonpostinvestigations], which got several earfuls in court from both its creditors and the bankruptcy trustee overseeing its operations over plans to award more than $3.5 million in bonuses to "key employees."
It's been a rough year for the beleaguered publisher, with piling losses, sell off Mortal Kombat [http://www.escapistmagazine.com/news/view/89969], its most recognized and beloved franchise. Despite all that, someone decided it would be a good idea to fork over $3.755 million dollars in bonuses to 29 key employees, a tough sell at any time but particularly galling in the midst of this gurgling toilet swirl we call an economy.
Midway's creditors and bankruptcy trustee therefore headed off to court to express their reservations about the bonuses, which were to be awarded based on three "key steps": Selling the publishing rights to Mortal Kombat [http://www.wheelmangame.com/] franchise or submitting a reorganization plan to the court ($1.3 million) and successfully closing the Mortal Kombat sale or having the reorganization plan approved by the court ($2 million).
There are many problems with this plan, according to everyone who isn't a Midway executive. First, the Wheelman publishing rights had already been sold when the incentive plan was drawn up, leading creditors to say, "The notion that a bonus program designed to reward employees for past accomplishments could be considered an 'incentive' is simply disingenuous." Then there's the fact that the sale of Mortal Kombat and the reorganization of the company are what Midway executives are supposed to be doing right now; it is, in essence, the totality of their jobs at this point. Why should they receive special pay for simply fulfilling the basic requirements of their jobs?
There is also concern over the fact that the second and third "milestones" for bonuses - the sale of Mortal Kombat and/or the submission and approval of a reorganization plan - apparently have no performance-related limitations attached. In other words, they get paid the same regardless of when and how well, or how poorly, they do the job.
And even if bonuses are somehow justified, which I find rather hard to swallow, the trustee claimed the amounts sought by the company are "outrageous," adding, ""The Debtors seek authority to pay bonuses to a selected group of officers and managers which are four hundred percent greater than bonuses paid to the same group in 2008 when the Debtors were not before the Bankruptcy Court."
For what it's worth, Midway executives agreed to revise the bonus plan and submit it to the court for consideration tomorrow. It's reasonable to assume that the amounts will be toned down somewhat but what I'm having trouble understanding is why the bonus plan is being "revised" and not "eliminated." The iconic Midway has been run into the ground and people are being patted on the back for a good job?
Source: The Cut Scene [http://weblogs.variety.com/the_cut_scene/2009/03/feds-creditors-call-proposed-midway-executive-bonuses-outrageous-disingenuous.html]
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