Hawaiian Telcom presses for $6M in employee bonuses
POSTED: Saturday, March 21, 2009
Hawaiian Telcom Communications Inc. —which filed for bankruptcy in December—seeks to pay $6 million in bonuses to 1,418 eligible employees in May.
The Honolulu company filed a motion with the U.S. Bank-ruptcy Court in Hawaii to proceed with its annual performance compensation program for 2008, as approved by its board of directors, as well as for this year.
A hearing is scheduled before U.S. Bankruptcy Judge Lloyd King on April 16.
“;Our employees are the key to our long-term success and our ability to emerge from Chapter 11, so I, and the rest of the board members, have determined that it is critical that we stand behind their accomplishments and honor our commitment to them,”; said Walter Dods, Hawaiian Telcom's chairman.
The $6 million figure was reduced from $7.9 million in order for the company to obtain support from its secured lenders.
Hawaiian Telcom President and Chief Executive Eric Yeaman volunteered to forgo his $609,000 bonus for 2008. The company also said six senior vice presidents agreed to defer 50 percent of their bonuses.
The move comes at a time when much of the American public is outraged at insurance giant AIG for its original plans to pay $165 million in bonuses to its executives after receiving billions in federal bailout money.
Gov. Linda Lingle called the Hawaiian Telcom move unconscionable, saying the state would oppose it in court.
“;Hawaiian Telcom is the critical communications backbone for our state, and its action to pay millions in bonuses puts the company in a precarious position that jeopardizes its long-term viability,”; said Lingle, “;as well as threatens Hawaii's economic recovery.”;
Lingle said Yeaman “;could have and should have put an immediate stop to this outrageous action.”;
But Dods says the company is simply holding up its part of a contractual agreement.
“;We got no government funding,”; said Dods. “;There's not a dime of taxpayer money in this. We have a collective-bargaining agreement that calls for payments if we reach certain goals.”;
Hawaiian Telcom's agreement is with the International Brotherhood of Electrical Workers Local 1357, which praised its move.
Hawaiian Telcom employees agreed to a 10 percent pay cut about three years ago, said Dods, with the understanding they would recoup some of it if they met certain performance targets, which they did. Most of the bonuses—93 percent—go to non-senior management, which includes both union and non-union employees.
U.S. Rep. Neil Abercrombie blasted Lingle for associating Hawaiian Telcom with AIG, calling it an unnecessary bombast.
“;The two situations have nothing to do with each other,”; said Abercrombie.
He added that Hawaiian Telcom appears to be “;doing the right things”; to emerge from Chapter 11 bankruptcy proceedings.
Hawaiian Telcom based the amount of bonus compensation on a metric equation weighing revenue, adjusted earnings, and cash flow compared to predetermined performance goals, which came out to $7.9 million. This year's bonuses, based on the 2009 compensation program, are expected to be paid in 2010.
“;This is routine performance pay, not five rich cats getting $6 million,”; said Dods. “;We feel strongly that this is the right thing to do.”;