The executives at Kodak better check their latest batch of Reardon Metal, because the train bringing them a $13.5 million reward for putting the company into bankruptcy just jumped the tracks:
The trustee is an arm of the Justice Department charged with monitoring corporate bankruptcy cases. In a U.S. Bankruptcy Court filing Monday, the trustee says Kodak hasn’t shown, as required, that the bonuses it wants to pay won’t go to high-level insiders like Chief Executive Antonio Perez.
The other day I was talking to an attorney who does some bankruptcy work, and I learned that the bankruptcy trustee is usually a private attorney hired by the bankruptcy court who gets a cut of the money returned to creditors during the bankruptcy process.* So, the bonuses for Kodak executives are coming, in part, out of the trustee’s pocket, and, unlike the complacent board of directors, this attorney is going to fight those bonuses tooth and nail. Just imagine if there was some kind of third party who worked for corporations and got a percentage of the cuts they made in executive compensation plans. That would be socialism, and therefore impossible to implement, but it’s fun to imagine.
c u n d gulag
I’ll never understand why bonuses are given for failure. Wassupwidat?
It’s like giving the kid in the class who wrote the worst paper, the same grade as the one who wrote the best.
You’re supposed to “bonus” success – not the successful closing of a company, and the elimination of jobs.
If your company goes under while you’re at, or near the top of the food-chain, you don’t get an “A,” you get an “F” – for ‘F’ailure – and ‘F’*ck You!
If the poor schmuck on the line doesn’t get a ‘farewell’ bonus, why should the CEO and his/her lackies?
El Tiburon
How the word BONUS can be in the same sentence with BANKRUPTCY is the real story. Seems to me if your company goes bankrupt, ipso facto you get no bonus.
Face
And I’m sure it will be excoriating, arrogant, and vociferous.
4tehlulz
rEVOLution!110001111
Villago Delenda Est
This is the thing about the CEO class.
Once you’re in, you can’t suffer the consequences that mere peasants would suffer for some major fuckup. You’re immune. I mean, just look at Carly Fiorna. She’s still got bazillions, even though she not only drove HP into a ditch, she went out of her way to find the Grand Canyon to drive it into.
She’s still sitting pretty on her ill gotten gains.
Once your in the club, you’re golden. There is no fuckup you can blinding stumble into that will cause you to be ejected.
Belafon (formerly anonevent)
@El Tiburon: It’s not just executives that receive bonuses. The bonuses are supposed to keep people like the engineers from abandoning the company while it goes through restructuring.
Now, executives should know that they aren’t going to receive a bonus, because they blew their job, but the company has to try to keep some of their talent.
Hoodie
@Belafon (formerly anonevent): Yeah, that’s theory, but the reality is that most of the engineers with marketable expertise are gone by this point because Kodak has long been a career dead end for them. These bonuses are more likely bullshit excuses to allow the management to extract a little more warm blood from the corpse under the guise of retaining talent. Kind of like across the board tax cuts that are a bonanza for rich folks.
gaz
For awhile, Kodak had an inkjet with the lowest operating cost.
I seem to remember that back in the day, they had some decent cameras too.
I switched to cannon on both counts (camera, and printer) and never looked back. I’m quite happy with them.
It doesn’t surprise me that Kodak is a sinking ship.
As always, the bonuses being handed out to the people that destroyed the company is unnerving, but by now I’m so used to it that I’d be more surprised if the situation played out fairly.
dedc79
Not sure about this but it may be that the lawyer’s cut is protected no matter how much gets paid out. That would take away the incentive you identified. That said, hopefully some actual bankruptcy attorneys can weigh in with comments to clarify
Yevgraf
Agreed with above – the talk about these as retention bonuses, so that upper level managers who ostensibly have special knowledge of the ins and outs don’t bolt.
The problem is that we’ve created a class of whiny ass entitlement titty babies that inhabits boardrooms, and they don’t have any genuine clue about the specifics of what is occurring. They become great deciding deciders, and are therefore fungible – you can replace them with anybody with a modicum of common sense, and the strategic direction will go along about as well as possible.
The people who really need retention are the executives’ assistants and middle managers in marketing, operations, accounting and purchasing, but they’re usually punted early.
deep
Yeah, it would be nice if these Corporations remember that they work for their shareholders too. I can’t remember the last time I had a half-way decent dividend on any of my stocks, and yet the executives are still getting nice preferred stock options.
Fuckwads.
Omnes Omnibus
@ mistermix: Your bankruptcy trustee explanation is close enough to give a general understanding of how it works.
@Face: Bite me.
Mudge
In reality Kodak signed its death warrant back in the ’70s and ’80s when it failed to vigorously pursue electronic imaging. They became a reflexive and derivative, not an innovative company. Their newer product lines back then included instant cameras and copiers, products the marketing guys felt would carve a niche in existing markets, but never did. Current management is presiding over the funeral more than anything.
Villago Delenda Est
@Yevgraf:
Willard Romney.
In a nutshell.
Face
@Omnes Omnibus: Sue me. Wait a minute….nevermind. Please dont.
LOOK!
SQUIRREL!AMBULANCE! :)gaz
@Yevgraf:
Buh, buh but “WE EAT WHAT WE KILL!1111”
Please. For $2 I’d beat one of these fucks with a pool cue until they had detached retinas (h/t futurama)
What a bunch of pussies. I’d be better at their jobs than they are, and would kill them in any kind of street fight. So how again, are these folks so superior? heh. In any measurable way, I’m more capable, more evolved, and a better all-around person than any of these arrogant bitches. But they were born with a silver spoon in their mouths. Bring that shit to my door, and I’d shove the fucking spoon up their asses. sideways.
Howlin Wolfe
There are two types of trustees in the bankruptcy system: one is the the private, case by case, judge-appointed trustee for an individual or corporate Chapter 7, and the office of the US Trustee, which is indeed an arm of the Justice Department, and is charged with monitoring compliance with the statutes and regulations by the debtors, among other things.
Yes, I’m a lawyer in the crowd. I did practice consumer bankruptcy for years, and I understand you don’t want the US Trustee flagging one of your files.
Southern Beale
I think it depends on what state you live in. I know someone who is a bankruptcy trustee in Kentucky, I thought she had to run for that position. I could be wrong.
Here in TN we are having a blast (pun intended) as our state’s top gun lobbyist has gone off the deep end, threatening the chairwoman of the House Republican Caucus because the GOP leadership won’t bring a guns-in-parking-lots bill to a floor vote. This gun loons overreached big time, because now they’re pitting property rights advocates against the gun loons. Republicans in disarray! Hilarious.
deep
@Southern Beale:
Beale! Update your blog!
(Just kidding, I know you said you were busy.)
Villago Delenda Est
@Southern Beale:
This is why you have a government. Because, inevitably, there will be a clash between one group’s sacred rights and another group’s sacred rights. Who wins? Someone is going to have their feefees hurt in this process.
The answer of the “Libertarian” is, of course, I WIN, because I’m the “Libertarian” and I’m concerned about liberty! Mainly my liberty. To bash in your face if I feel like it. I am, through the empowering majesty of my superior philosophical position, the one who gets the last laugh, always.
In other words, I’m the new feudal lord. Suck on it, serfs!
Belafon (formerly anonevent)
@Hoodie: I was part of a major telecommunications company that went through bankruptcy. The people at my level received bonuses to stay on, while most of the executives did not. A lot of engineers do stay on.
Southern Beale
@Villago Delenda Est:
The problem with the gun loons is they aren’t content to let the will of the people or even the free hand of the market do their magic. No, THEY win because they’ve got the goddamned gun!
Villago Delenda Est
@Southern Beale:
ZOMG, men with guns deciding how things will be!
Gosh, isn’t that just another shot of cold water in the face of the idiots out there who seem to think a well armed society is a polite society.
Culture of Truth
a well armed society is
aanpoliteasshole society.Forum Transmitted Disease
@Southern Beale: No, sadly, they have not. This has played out in a bunch of states and the gun loons have won every time.
Thank God I live in California, where this kind of bullshit is not allowed to take hold.
Svensker
@Southern Beale:
Crikey. Used crucifix. Oy. And just HOW have the .45s used by “patriots” defended the freedoms of this country over the last 100 years? Fending off commies in TN?
RalfW
Somewhat OT, but in the realm of economics, this Guardian headline
Whoucouldaknowed that austerity would behave pretty much as Keynes suggested? He was just an old fart and everyone knows gubmit bad, job creators good, amirite?
Narcissus
@gaz: put this on pay-per-view please
Belafon (formerly anonevent)
@RalfW: Keynes was wrong because he was measuring the wrong thing. The true measure of success is how many necks you have under your boot.
Judas Escargot, Your Postmodern Neighbor
@c u n d gulag:
Once you’re a Made Man, you’re always entitled to your cut, regardless of actual performance.
Bk Lawyer
Bankruptcy lawyer here: The United States Trustee, objecting party here, is an official of the Department of Justice who is responsible for seeing that the rules and regulations governing a bankruptcy case are followed. In a chapter 11 case like Kodak, there is no “trustee, because the debtor is still in charge of its own business. In a chapter 7 liquidation, the United States Trustee appoints a private trustee to liquidate the debtor’s assets, for which the trustee gers a commission, for distribution to creditors. So the US Trustee is acting here not out of any financial incentive, but to enforce the Bankruptcy Code’s guidelines on bonus and retention and plans, which are permissible to keep rank-and-file workers on board so as to not to harm the business even further.
Hewer of Wood, Drawer of Water
OT, but Gallup now has Obama up by 7,his biggest lead over Mittsy since they began polling that matchup
http://www.gallup.com/poll/154091/Obama-Job-Approval-Leads-Romney.aspx
I’m sure VeriCato or whatever he’s calling himself will be along to explain how this means VICTORY for Romney
300baud
According to the article, the $13.5m breaks down as an average of $75k to 119 middle managers and an average of $25k to 200 key employees.
So in Kodak’s view middle managers are 3x more valuable than key employees, and you need one middle manager for every 1.7 key employees.
Gosh, I wonder why they’re going into bankruptcy?
AA+ Bonds
Surplus value = surplus repression!
AA+ Bonds
@c u n d gulag:
I believe the concept is ‘rate of exploitation’
Brachiator
@c u n d gulag: The story notes:
If payments to executives are being hidden here, the trustee has a very legitimate objection. But I don’t see that the bonuses are just going to corporate lackeys. The failure of Kodak, which used to employ what, around 14,000 people and was one of the major employers Rochester, NY, is an American tragedy.
Are you suggesting that since, the company is going under anyway, all the employees should be fucked equally?
Chris
@c u n d gulag:
Definitive proof of how completely and utterly full of shit they are when they claim that their version of laissez-faire capitalism is all about “meritocracy.” It’s funny how often you hear them use the argument against communism – “duuuude, how can you give the same amount of money to someone who failed than to someone who succeeded? That’s like giving an A to an F student!”
Oh, look – that happens to be exactly how the fucking CEO class works in this country.
Barry
@Brachiator: “Are you suggesting that since, the company is going under anyway, all the employees should be fucked equally?”
What I’m suggesting is that the top 10 people (plus the board) should indeed be f*cked, and hard. And not in the fun way.
AA+ Bonds
@Chris:
Wellllll
I would say it’s more like everyone at class is working on a team project and the entire class divvies up a finite amount of points for credit, but the capitalists grade each other as well as everyone else, because they own the room where the class is held, so they demand A-plusses for themselves regardless of who does the work and make everyone else compete overtime for D-minuses under the constant threat of getting a zero if someone else will do more work for the same grade
The CEOs are part of the capitalists but masquerade as everyone else and claim that they are just getting the grade they deserve for providing the room for the class
You also have to assume here that it wouldn’t be possible for any of the students to quit and teach themselves with less trouble, and that there is no theoretical limit to how high an individual grade can be
AA+ Bonds
That is a massacre of an analogy but gives an idea of why that happens
dmbeaster
Want to reinforce what BK Lawyer said above – Kodak’s bankruptcy is a chapter 11 reorganization, and therefore there is no trustee in charge of the company or working to get money to creditors. The practice mistermix is referring to applies to chapter 7 liquidations. Here, the trustee is part of the DOJ and is enforcing general bankruptcy law concerning payments to employees in a chapter 11. Creditors oversee chapter 11 liquidations through the creditors committee rather than having a trustee as in chapter 7.
Anymore, I think “bonuses” are viewed in business like so much deferred compensation. It insures that employees stick with the job and work diligently during the year to pick up that measure of deferred compensation. This is true even more so at the higher executive levels – the bonus really has little to do with reward based on overall company performance. It should, but it doesn’t.