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Frontier Executive Bonuses in the Millions Despite Bankruptcy

Skepticism

A New York bankruptcy judge has approved nearly $38 million in executive bonuses at Frontier Communications amid the company’s Chapter 11 bankruptcy.

That’s according to a Law360 report. The judge said the executive bonuses are in line with industry standards and are not earmarked for company insiders.

Christmas bonus

Christmas comes early for Frontier’s C-suite. The company is dishing out some big executive bonuses, despite its chapter 11 bankruptcy status.

U.S. Bankruptcy Judge Robert Drain approved the proposed bonuses during a telephone hearing. The U.S. Trustee’s Office objected, but the judge gave the green light after two creditor groups dropped their objections when Frontier agreed to adjust the payment schedule.

Frontier didn’t respond to our request for comment about the bonuses.

Was the Frontier bankruptcy inevitable? Our timeline breaks it down.

Frontier filed Chapter 11 bankruptcy last month as part of its restructuring support agreement to cut its debt by more than $10 billion. Three in four (75%) Frontier bondholders support the agreement.

The company also got $460 million in debtor-in-possession (DIP) financing. Frontier said the agreement gives it financial flexibility for long-term growth.

Customer Losses

For the first three months of 2020, Frontier lost 44,000 (1%) of its consumer customers. That compared to 65,000 (2%) for the previous three months. As of March 31, more than half (54%) of its consumer broadband customers also subscribed to at least one other service.

Frontier lost 1% of its consumer broadband subscribers during the period. That’s mostly to competitors offering lower prices or higher speeds, it said. It experienced a 6% decline in video subscribers primarily due to customers increasingly opting for other video services.

Last year, Frontier lost 40,000 (10%) of its commercial customers, compared to 42,000 (9%) in 2018. Small business customers made up 91% of the loss.

Larger customers that jumped ship did so mostly for more established services and higher speeds.

Frontier’s bankruptcy filing joins similar moves by Windstream, Sungard AS, Fusion Connect and other big channel players — in just the past year. Its financial struggles were widely known, as were customer complaints about its service, maintenance and lack of planning for rural broadband expansion.


2 comments

  1. Avatar Ben Stiegler June 18, 2020 @ 2:02 pm

    Only $38M? Suprised they didn’t round it up to 50. But more seriously – wonder how many execs that is spread across, and what the average bonus payout will be.

    Morally – just because its in line with industry standards doesn’t mean its the right thing to do. Rewarding leadership for ruining, then trying to save a company seems to be the wrong carrots and sticks. However, if an exec joined the team after the BK filing, maybe they should be eligible.

  2. Avatar sassiflavio@yahoo.it June 19, 2020 @ 4:36 am

    Good morning
    I would like to know what Frontier foresees for the bonds I own? The bank says Frontier skips all coupon payments. Now? Thanks

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