Reuters: Bankruptcy News: US bankruptcy judge rejects Hawker Beechcraft exec bonuses

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US bankruptcy judge rejects Hawker Beechcraft exec bonuses Aug 24th 2012, 22:01 Fri Aug 24, 2012 6:01pm EDT * $5.33 million bonus scheme would have covered 8 executives * Judge says Hawker failed to justify proposed bonus payouts * Aircraft maker says to evaluate changes to payout plan By Jonathan Stempel Aug 24 (Reuters) - A federal bankruptcy judge on Friday rejected a proposal to pay eight senior Hawker Beechcraft Inc executives as much as $5.33 million in bonuses, saying the payout was merely a reward for staying with the aircraft manufacturer. U.S. Bankruptcy Judge Stuart Bernstein said Hawker, owned by Goldman Sachs Group Inc's GS Capital Partners private equity fund and Canada's Onex Corp, failed to show how the executives, including its chairman and chief financial officer, would contribute services that justified the bonuses. He also said the executives, "regardless of the road" the company took, would likely be eligible to earn some bonuses, making the program look more like a "disguised retention plan" than a true incentive plan. "Nothing in this opinion is meant to denigrate the efforts of the senior leadership team or minimize their contributions to the success of the case," Bernstein wrote. "Nevertheless, the (2005 U.S. Bankruptcy Code) changes impose a high standard that requires challenging goals that insiders must meet in order to earn a bonus." In a statement, Hawker said the plan "was designed to recognize the critical role that the leadership team has in the company's ongoing restructuring process, and we are evaluating next steps toward amending the incentive plan so that it conforms to the guidance in the court's opinion." Last month, Bernstein approved a $1.9 million retention plan for 31 more junior, but "key," employees at the Wichita, Kansas-based company. The plan for senior executives had drawn objections from the Office of the U.S. Trustee, which is part of the Justice Department, as well as the International Association of Machinists and Aerospace Workers and AFL-CIO. Hawker filed for Chapter 11 protection from creditors on May 3. Last month, it entered exclusive talks with China's Superior Aviation Beijing Co for the possible sale of some businesses for $1.79 billion. The case is In re: Hawker Beechcraft Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-11873. Link this Share this Digg this Email Reprints

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