Bankruptcy judge OKs $6 million in bonuses at HawTel


POSTED: Friday, April 17, 2009

A federal judge has approved $6 million in bonuses for 1,418 eligible Hawaiian Telcom employees who can expect to see them on their next paycheck in May.

The Honolulu company, which filed for bankruptcy Dec. 1, sought to proceed with its annual performance compensation program for 2008 as approved by its board of directors.

U.S. Bankruptcy Judge Lloyd King granted the motion yesterday but deferred some payments until Hawaiian Telcom emerges from bankruptcy.

Each nonunion employee will receive full payment of up to $10,950, King said, plus an additional 8.33 percent of their annual bonus to cover the first month of bankruptcy. Employees who earned more, however, will have to wait until the company is solvent.

Also, nonunion employees must continue to be employed at the company to receive the bonuses. The count includes 917 union workers and 501 nonunion employees, including six senior vice presidents and the chief executive, Eric Yeaman.

“;We're pleased,”; said Hawaiian Telcom spokesman Brian Tanner. “;We respect the judge's decision to add some conditions. We're going to work hard to work with all the parties involved to complete our reorganization and emerge from bankruptcy.”;

He said the amounts granted immediately represent about 83 percent of the $6 million.

King said his intention in postponing the remainder of the bonuses was to motivate higher executives to continue working to pull Hawaiian Telcom out of bankruptcy.

He added, however, that the team in place was not responsible for the company's current financial situation.

Attorneys for the U.S. Trustee and Official Committee of Unsecured Creditors objected to the bonuses, saying it was excessive and unwarranted in this economic climate, favoring the employees over other general unsecured creditors.

Jerrold Guben, special deputy attorney general representing the state Public Utilities Commission, objected to bonuses for the senior vice presidents.

He said public ratepayers are entitled to weigh in on what senior executives are making. If they want to offer $300,000 a year, for example, let the public decide whether it's what they deserve.

Hawaiian Telcom defended its plan to move forward with the bonuses, saying its employees are the key to its long-term success.

The employees were originally slated to receive $7.9 million, but the amount was reduced to $6 million to obtain support from secured lenders.

Christopher Marcus, Hawaiian Telcom's attorney, said the nearly $2 million cut came mostly out of the pockets of senior management. Chief executive Yeaman volunteered to forgo his $609,000 bonus for 2008, while the senior vice presidents agreed to defer 50 percent of their bonuses.

In addition to the $6 million in bonuses for employees in 2008, Hawaiian Telcom also seeks approval for another $9.5 million in bonuses this year.