The U.S. Bankruptcy Court will allow Riverside, Calif.-based Fleetwood Enterprises Inc. to pay key executives a total of $873,669 in incentives and bonuses and $571,508 worth of severance payments, after lawyers with the company, the U.S. trustee and the attorney representing unsecured creditors in the case supported the plan’s approval.
Executives who have been promised incentive bonuses ranging from $232,000 to $51,450 include Andrew M. Griffiths, senior vice president and chief accounting officer; Leonard J. McGill, senior vice president, general counsel and secretary; James F. Smith, vice president and operations controller; Paul C. Eskritt, president of the RV division; Charles E. Lott, president of the housing division; and Michael B. Shearin, senior vice president human resources, according to the Riverside Press-Enterprise.
The bonuses are based on the senior executives’ ability to complete a reorganization plan that is confirmed by the court by Oct. 30. The bonus amount decreases the longer it takes. In court filings Fleetwood also said incentives were offered to keep key personnel with the company rather than risk they would leave for work elsewhere during reorganization.
Five other executives would also be eligible for bonuses. Another 32 employees would be eligible for severance.
Elden Smith, Fleetwood’s CEO, agreed to cut his salary from $873,000 annually to $60,000 to compensate for some cost of the incentives.
Hamid Rafatjoo, a lawyer representing the committee of creditors in the case, said he took issue with an earlier proposal with a larger amount of bonuses but was happy with the plan approved by the court Wednesday.
“People did in fact work late in the night and into weekends,” he told Judge Meredith Jury, adding that they did so in an effort to get higher bids for the company’s RV division, to no avail.
“They do deserve combat pay for dealing with that RV buyer,” he said, referring to American Industrial Partners. The New York equity firm bid $53 million for the RV division. The deal hasn’t closed.
Jury agreed, saying an “enormous amount of work” has been done by Fleetwood to attempt to get multiple bidders for its assets.
“To have one bidder is probably lucky,” she said, considering the economy and state of the RV industry.
At the same hearing, Fleetwood informed the judge that a deal to sell its Douglas, Ga., plant had fallen through because the buyer couldn’t get financing.