The United States Trustee overseeing the bankruptcy process of Relativity Media, William K. Harrington, has objected to a proposed incentive program to keep key executives and employees in their posts as the sale process moves ahead.
In documents filed on Friday with the U.S. Bankruptcy Court in New York, Harrington said there was “no evidence that the executives would not perform the work necessary to maximize the sale irrespective of the proposed bonuses,” and that the proposed compensation rates were “achieved imminently or may have already been met by the stalking horse bid.”
The terms of the Key Employee Incentive Plan (or “KEIP”) would pay out an estimated $314,868 in incentive bonuses for staying on board. The execs would be paid the day after the proposed sale closed.
In late August, Relativity named executives crucial to both the bankruptcy sale process and the long-term recapitalization of the company. They include President Tucker Tooley, Managing Director Carol Genis, Co-Chief Operating Officer Greg Shamo and Chief Financial Officer Andrew Matthews, and TV CEO Tom Forman. Studio founder Ryan Kavanaugh was not included in the incentive program.
Eighty out Relativity’s remaining 84 staff employees qualified for similar incentives.
Relativity Media is scheduled to head to bankruptcy auction on October 1. It has a current bid for $250 million from a group of its senior lenders.
Rivals have until September 25 to enter bids for the company, which lists film and TV assets in its Chapter 11 filings.