Building materials manufacturer Owens Corning was well within its rights to offer bonuses in order to keep its top executives, a judge said 9 September 2004.
Bank creditors challenged the proposed U…
Building materials manufacturer Owens Corning was well within its rights to offer bonuses in order to keep its top executives, a judge said 9 September 2004. Bank creditors challenged the proposed USD 2.3 million in bonuses for top executives at Owens Corning, which filed for Chapter 11 bankruptcy protection in October 2000 under the weight of asbestos damages claims. With Owens Corning“s share value wiped out, the retention program was intended to keep executives from leaving the company as it tries to come out of bankruptcy. Nearly 300 managers are eligible for some type of bonus, although debt-holders had only challenged incentives for the highest level executives, whose base pay would be doubled by the bonuses. U.S. Bankruptcy Chief Judge Judith Fitzgerald said there was evidence that the five top executives have turned Owens Corning around and so could be targeted by headhunters seeking to recruit them for rival companies. “The banks are benefiting just like everyone else,” Fitzgerald told lawyers for Credit Suisse First Boston, which is serving as the agent for banks trying to block the payments. The bonuses were approved for 2004 and 2005. The chairman of the company“s compensation committee, which authorized the bonuses, testified on 9 September 2004 that he never asked David Brown, president and chief executive, or any other top executive, whether they would leave the company without the incentives. “I asked if he thought we were vulnerable from competition from other companies and he said “yes,“” said Landon Hilliard, head of the committee. Brown is integral to every decision made at the company, but had no vote on compensation packages, Hilliard said.