I.B.C. asks court to approve $6 million bonus plan
February 08, 2008
by Eric Schroeder
KANSAS CITY — Interstate Bakeries Corp. this week asked the U.S. Bankruptcy Court for the Western District of Missouri for approval to pay up to $6 million in bonuses to 520 top employees, approximately $7 million less than the incentive plans I.B.C. had in place before it sought bankruptcy protection more than three years ago.
In its Feb. 6 filing, I.B.C. said the fiscal 2008 incentive-based bonus plan is designed to motivate the employees to "increase the profitability and advance the interests of the company, thus increasing the debtors’ enterprise value and enhancing the returns for all stakeholders during the debtors’ Chapter 11 cases."
I.B.C. said that since filing for bankruptcy in September 2004, the company has suspended or terminated its employee profit sharing program, supplemental retirement plan and deferred compensation plan. Under the bonus plan, I.B.C. would pay bonuses of between 5% and 60% of the employees’ base salaries tied to the performance of the company’s business units, individual performance and the company’s overall financial performance. About 80% of the employees covered by the bonus plan would be eligible for bonuses of between 5% and 10% of their base salaries. The bonus plan would be similar to one approved by the bankruptcy court last year.
"Such an incentive plan is particularly important here because many of the participants have not received merit pay increases for over three years, and the participants’ base salaries are generally below market in most regions of the country," I.B.C. said.
Of the 520 employees who would be covered by the bonus plan, I.B.C. said most would be from the rank of manager up through executive vice-president. Neither Craig Jung, the company’s chief executive officer, nor senior managers who work under consulting contracts with I.B.C., are eligible under the plan.
The bonus plan covers the period from June 3, 2007, through May 31, 2008, which coincides with I.B.C.’s 2008 fiscal year.
A court hearing on the proposed bonus plan is scheduled for Feb. 26.