P'tex to downsize KERP, reveal some bonuses
September 12, 2003,
Wilmington, DE — Pillowtex Corp. this afternoon agreed to downsize the scope and dollar amounts of its Key Employee Retention Program as well as disclose the bonuses that the top five officers of the company would receive.
During a federal bankruptcy court hearing here, attorneys for the company, its creditors' committee and union announced a settlement to most objections to the plan. The revised KERP will be paid to a total of 122 participants instead of the original 143, and incentive and variable incentive bonuses may be paid to 21 instead of 29 employees.
The final terms of the settlement were reached just before the hearing got under way, said Pillowtex attorney Michael Wiles.
Separately, the company and the Charlotte Observer, a newspaper in North Carolina, agreed to disclose KERP bonuses, following a challenge to Pillowtex's efforts to seal or redact employees' names.
Under the agreement, the firm will disclose the amounts to be received by ceo Michael Gannaway, president Michael Harmon and three others.
In an interview following the hearing, Harmon said he and Gannaway would receive $300,000 each in retention bonuses, and 16 percent of the variable bonus pool, if any.
''I'm perfectly fine with it,'' Harmon said. ''Unfortunately, I've lived in the public eye for many years, so it doesn't bother me. We probably would have disclosed this information anyway.''
The agreement came following a brief recess in the nearly two-hour session and at the behest of chief bankruptcy court judge Peter Walsh.
It was also disclosed during the hearing that Gannaway and Harmon had voluntarily surrendered their letters of credit containing the pre-bankruptcy petition terms of their severance arrangements with Pillowtex. They returned the LCs during negotiations over the KERP, according to Wiles.