Adelphia Communications Corp. has asked the U.S. Bankruptcy Court for
permission to initiate a performance-related executive-retention plan that could
affect about 125 employees at the Coudersport, Pa.-based MSO.
In documents filed with the court Friday, Adelphia said the retention plan
was necessary to attract "highly qualified and motivated employees to assist [Adelphia] through the reorganization process and
Adelphia filed for Chapter 11 bankruptcy protection in June.
Last month, the court approved the hiring of former AT&T Broadband
executives William Schleyer and Ron Cooper as its chairman/CEO and
president/chief operating officer, respectively. The court also approved a pay
package for Schleyer and Cooper that could pay the two a combined $41 million
over three years.
According to the Bankruptcy Court filing, executive vice presidents, senior
VPs, VPs and directors would receive annual retention bonuses of 25 percent to
200 percent of their base salaries, based on Adelphia's earnings before
interest, taxes, depreciation, amortization and reorganization expenses.
No bonuses would be handed out unless Adelphia achieves at least 91 percent
of its performance target.
Bonuses would be paid in cash and, after Adelphia emerges from bankruptcy, in
restricted stock in the reorganized company.
In the document, Adelphia estimated that the retention plan would cover about
125 employees, but that only about 50 would participate initially.
The cost of the program would eventually be about $17 million per year.
However, the MSO only expected to pay out about $3 million in 2003 and $6.5
million in 2004 because not all 125 employees would participate.
Adelphia also proposed an indemnification plan for its future directors that
would protect them against possible legal action.
According to the proposal, the indemnification
agreement would provide that Adelphia "advance all expenses incurred by future
directors in connection with the investigation, defense, settlement or appeal of
any civil or criminal action or proceeding."