BOSTON – Polaroid Corp., which slashed jobs and retiree benefits before filing for bankruptcy protection in October, wants to reward top executives with up to $19 million in bonuses and incentives as it dismantles the instant camera and film maker to pay off creditors.
Lawyers for the Cambridge, Massachusetts, company will argue for the payments on behalf of about 45 executives during a Dec. 11 hearing in Delaware's U.S. Bankruptcy Court, court papers show. The group also would stand to collect 5 percent to 6 percent of the proceeds from Polaroid asset sales.
``Because it is unlikely that (Polaroid) would be able to attract new employees, (Polaroid's) current key employees are truly irreplaceable,'' according to a motion filed with the bankruptcy court.
Such payments, though not uncommon in bankruptcy proceedings, incensed Dan O'Neill, 61, a Polaroid veteran who lost his job and a 31-week severance package when the company filed Chapter 11 as creditors sought nearly $1 billion in payments.
``It's a total disgrace,'' O'Neill told Reuters. ``It shows how much they really cared about the people. The executives are just taking care of themselves.''
The company employed 8,865 people at the beginning of the year, but job cuts have reduced that number by about 3,000. Polaroid also dropped retiree health care benefits to save money.
Polaroid wants U.S. Bankruptcy Judge Peter Walsh to approve $5 million in guaranteed retention bonuses next year for about 45 Polaroid executives. In addition, proceeds from $200 million to $275 million in asset sales would generate up to $13.75 million, or 5 percent, for a key employee incentive pool, according to the company's plan.
Total proceeds above $275 million would contribute 6 percent to the incentive pool. The targets seem achievable for a company whose sales were nearly $1.9 billion last year.
CHAIRMAN WOULD BENEFIT MOST
Polaroid Chairman Gary DiCamillo stands to collect the largest amount of bonus pay because it is based on a percentage of an executive's base salary. DiCamillo made $838,950 last year, not including $107,232 in retention pay.
The exact amount he and other executives would receive, however, is being kept secret unless interested parties sign a confidentiality agreement, court papers show.
Under DiCamillo's leadership in the past six years, Polaroid's core photography business steadily deteriorated amid stiffer competition from one-hour photo shops and digital cameras, a market the company was late in entering.
Lawyers for Polaroid said the bonuses and incentives are essential for preventing low morale and resignations within the executive ranks. Defections could hurt asset sales.
Other companies in bankruptcy proceedings have distributed incentive payments to a wider base of employees than the Polaroid plan would.
In 1997, for example, the Delaware bankruptcy court approved $100 million in key employee payments at Montgomery Ward Holding Corp., which included 786 lower-level employees, according to legal precedents cited by Polaroid lawyers.
In a more recent case, collapsed energy trader Enron Corp. paid $55 million in bonuses to about 500 employees, days before it filed for bankruptcy and laid off 4,000 workers, sources told Reuters. The bonuses were given out to entice certain employees to stay on after the filing.
When Polaroid filed for bankruptcy protection, it agreed with lenders to accelerate its efforts to sell part or all of the company.
Earlier this week, Digimarc Corp. said it agreed to buy Polaroid's identification card-making business for $56.5 million in cash, plus the assumption of liabilities and expenses as part of an auction approved by the court.