Saturday, January 10, 2004

Gotbaum’s pay
still criticized

Hawaiian Airlines’ trustee
has moved to cut
his compensation

A move by the trustee of Hawaiian Airlines to cut his much-criticized request for compensation package by nearly 30 percent in the interim has not lessened objections from some parties involved in the bankruptcy case.

Joshua Gotbaum, who was hired as trustee of the bankrupt airline in July, this week reduced the compensation package for his services with the understanding that a federal judge will consider back-end loading the package upon the carrier's reorganization.

The new compensation package seeks up to $50,000 a month in interim compensation, capping out to $600,000 a year. The request also asks for up to $10,000 a month in expenses, said Bruce Bennett, an attorney who represents Gotbaum and Hawaiian Airlines.

But the package is still drawing criticism from Hawaiian Holdings Inc., the parent company of Hawaiian Airlines; and Robert C. Konop, a pilot for Hawaiian Airlines. Both parties filed complaints last week regarding the $840,000-plus compensation package Gotbaum originally sought.

Guy Neal, bankruptcy attorney for Hawaiian Holdings, said Gotbaum's new package is still exorbitant and doesn't provide clear parameters of what costs could ultimately be incurred.

"We feel its a clear conflict of interest," Neal said.

Konop also criticized the new compensation package saying it provided incentives for Gotbaum to engage in cost cutting mechanisms that could ultimately hurt the airline and its employees.

He raised the possibility of Gotbaum terminating the pilot retirement fund, seeking wage and benefits cuts, and demanding increased productivity to add to his claim for a bonus.

Gotbaum decided to withdraw his earlier compensation request after dialogue with U.S. Bankruptcy Judge Robert Faris revealed he would be more willing to consider compensation at the end of the reorganization, Bennett said.

"I've always felt that compensation should be determined by the court based on what is fair and right," Gotbaum said.

"In bankruptcies that are successful, the bonuses have sometimes been very large," he said. "I'm comfortable leaving that until the end of the case and to the judgment of the court."

Faris, who is set to rule on the motion at 10 a.m. on Jan. 23, appointed Gotbaum trustee of the carrier after allegations surfaced that the former Chief Executive Officer John Adams may have improperly diverted funds.

Hawaiian filed for Chapter 11 reorganization after the airline, which already had received $15 million in employee concessions, was unable to renegotiate $20 million in lease concessions from its aircraft lessors.


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