Hawker Beechcraft execs seek bonuses amid bankruptcy
July 24, 2012, Wichita, Kan. – Hawker Beechcraft wants to pay eight senior executives more than $5.3 million in bonuses as it tries to emerge from bankruptcy, but the request was challenged Monday by the Justice Department's bankruptcy watchdog agency and mocked by the company's machinist union.
July 24, 2012 By The Associated Press
July 24, 2012, Wichita, Kan. – Hawker Beechcraft wants to pay eight senior
executives more than $5.3 million in bonuses as it tries to emerge
from bankruptcy, but the request was challenged Monday by the
Justice Department's bankruptcy watchdog agency and mocked by the
company's machinist union.
The Kansas-based airplane maker hasn't shown that its proposed
bonus plan is not a "disguised retention plan," U.S. Trustee Tracy
Hope Davis argued in documents filed in bankruptcy court in New
York. Bonus plans are allowed but must do more than simply reward
managers for staying during a bankruptcy reorganization.
Hawker Beechcraft calls the bonuses an incentive award. The
company said the plan was developed to recognize the critical role
certain employees have in the bankruptcy process, arguing that their
continued employment is essential to the company's ongoing business
operations and restructuring.
"The plans are consistent with our commitment to emerging from
the restructuring process in the strongest operational and financial
position possible,'' the company said in a statement Monday.
Davis argued there must be other factors such as "challenging
standards" or "high hurdles" for debtors to overcome before they
can be paid bonuses, and that Hawker Beechcraft did not meet those
The U.S. Trustee Program is a division of the Justice Department
whose mission is to oversee bankruptcy cases and maintain their
integrity. A bankruptcy court hearing is scheduled for Thursday.
The International Association of Machinists and Aerospace Workers
said it plans to formally file an objection to the executive bonuses
before the hearing.
"You got to be kidding me. Bonuses? And you know, really when I
look at the company that owns Hawker Beechcraft, Goldman Sachs _ and
what the country went through with them and bonuses _ I guess I
shouldn't be surprised,'' said Matt McKinnon, legislative and
political director for the machinists union.
Hawker Beechcraft Corp., based in Wichita, is owned by Onex
Partners and GS Capital Partners, a Goldman Sachs private equity
fund. It has struggled with the sluggish business jet market more
than other plane makers because it was purchased in a highly
leveraged deal at the peak of the general aviation market, just
before the market tanked.
The company filed for bankruptcy protection in May. The court has
approved exclusive talks with a Chinese firm that has offered nearly
$1.8 billion to purchase the company's business jet and general
The amount of the proposed bonuses for each manager are based on
a formula that takes into account each executive's salary, the
timing of the bankruptcy reorganization and whether Hawker
Beechcraft emerges as a stand-alone entity or is sold to a third
For example, management bonuses would be reduced by 25 per cent
of each participant's base salary for each $100 million in purchase
price below the $1.79 billion deal offered by Beijing-based Superior
Aviation Beijing Co.
The highest potential bonus would be $1.26 million paid to Hawker
Beechcraft Chairman Bill Boisture. Others receiving lesser bonuses
would be various vice-presidents in charge of operations, human
resources, engineering, global customer support and customers, as
well as the general counsel and chief financial officer.
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