LTV CORP. Judge OKs bonuses for some officials
One union official called the plan 'a travesty.'
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- A federal bankruptcy judge has approved retention bonuses for some key LTV Corp. employees, but the amount to be paid was reduced as part of a compromise between the company and its creditors.
LTV and its lenders originally wanted to spend about $10 million for bonuses to encourage about 200 necessary employees to stick with the financially troubled steelmaker through its final months of existence.
Mike Rubicz, president of United Steelworkers of America Local 1375 representing LTV employees in Warren, said the compromise plan allocates about $6 million to be paid to 170 employees. The order by Judge William Bodoh of U.S. Bankruptcy Court does not stipulate the amount to be paid or the number of employees to receive compensation under the compromise plan.
Rubicz said that he's glad the amount of the payments was reduced but that he still thinks the plan is "a travesty and an injustice" when LTV retirees are about to lose their health benefits.
"What's happening is that the people who least deserve to get huge bonuses are getting them and the people who built the business are losing their health benefits," he said. "When you drive a company into bankruptcy, you don't deserve to be paid a bonus."
LTV has about 6,000 retirees in the Mahoning and Shenango valleys who stand to lose their health benefits in two to three months. Those who retired after 1999 will also see some reduction in their pensions when the Federal Pension Guaranty Corp. takes over LTV's pensions March 31.
Doesn't have details: Judge Bodoh approved the bonus plan agreed upon by LTV attorneys, its unsecured creditors and the company's lending banks, even though he said he was "not privy" to details of the plan.
"The court's role is not one of overseeing the management of the business affairs of [the] Debtor," Judge Bodoh wrote, in explaining how he could rule on the matter without knowing the details.
He said he approved the plan because his goal was to determine whether the action was a sound business purpose and in the best interest of the estate and its creditors.
"Certainly a program to provide incentives for the retention of key employees whom Debtor has determined to be necessary for Debtor's ongoing operations articulates a sound business purpose and is in the interest of the estate and creditors of the estate," Judge Bodoh wrote.
Objected to plan: LTV's unsecured creditors and unsecured noteholders objected to the original plan when the issue came up in court Feb. 5. They argued that too many employees were included and that the bonuses earmarked for each of the five top executives was too high. Each would have received a bonus of one year's salary.
Judge Bodoh said committees for both groups withdrew their objections to the plan after the compromise was reached.
This latest bonus plan is in addition to another bonus plan approved earlier that will pay about $900,000 to company officials in June.
LTV officials have argued that the payments are necessary to keep key employees who are working to sell the company's assets. Without the promise of bonuses, they have said, those employees might leave the company for other jobs.
LTV, once the third largest steelmaker in the United States, is liquidating the company and trying to sell its plants. All but 600 of its former 7,500 workers have been laid off.