A Chapter 11 bankruptcy court may approve bonuses for Windstream’s five most senior employees.
Windstream hopes to maintain its Key Employee Incentive Program (KEIP), which would benefit President and CEO Tony Thomas, Chief Financial Officer and Treasurer Robert Gunderman, Enterprise and Wholesale President Layne Levine, Kinetic business unit President Jeff Small and Executive Vice President, General Counsel and Corporate Secretary Kristi Moody. The program could dole out a total of $20.1 million if the executives meet their performance requirements throughout 2019.
Windstream filed for bankruptcy in February after a court ruled that it owed $310.5 million to one of its bondholders. The company announced last week that it will cut 15% of its partner base while upping commissions for the remainder.
The five executives are “generally responsible” for Windstream’s strategy and play a “central role” in the company’s Chapter 11 bankruptcy proceedings, according to Willis Towers Watson, which is consulting the reorganization efforts. The advisory firm declared to the U.S. District Court of the Southern District of New York Tuesday that the court should approve the KEIP as Windstream goes through the bankruptcy process.
The court filing states that the five members of senior management would only earn their base salaries without KEIP.
“This outcome could significantly undermine the Debtors’ ability to motivate their senior management to achieve desired business objectives,” wrote Zachary Georgeson, Willis Towers Watson’s senior consulting director. “The KEIP is, in part, designed to reasonably address this shortfall.”
The incentive program isn’t unusual, according to Georgeson, who said Windstream designed its incentive program to match the rest of its market. Its nine-company “executive compensation peer group” includes CenturyLink, Frontier, NetApp and Zayo Group.
Windstream would dish out incentive payments for the first half of 2019 and the respective third and fourth quarters. The maximum possible amount of total bonuses is $20.1 million, but the employees could earn a 0%, 50%, 100% or 200% percent depending if they meet their performance targets. Tony Thomas could accrue an extra $10.2 million if he reaches the “maximum award.” Kristy Moody has the lowest ceiling at $1.6 million.
Reuters first reported the news. Windstream is also trying to retrain its Key Employee Retention Program (KERP), which gives up to $5 million to select “non-insider” employees.
One of the company’s rivals said this week that it is actively pursuing partners cut from Windstream’s program.