U.S. Trustee, Cumulus Spar In Court Over Bonus Plans

Bonus

The U.S. Trustee involved in CUMULUS MEDIA's bankruptcy has filed an objection to CUMULUS' motion to pay bonuses to its executives.

In his motion, Trustee WILLIAM K. HARRINGTON alleges that CUMULUS has "failed to meet their evidentiary burden of proof to show that the proposed bonus payments comply with Section 503(c) of the Bankruptcy Code," and notes that the plans "not only award bonuses for targets that were obtained pre-petition, but also fail to provide information to allow the Court, creditors, and the UNITED STATES Trustee to determine if the metrics used in the plans represent challenging goals."

He also alleges that CUMULUS failed to meet the burden of proof to establish that "alleged non-insider plan participants, who include executives and officers, are not in fact insiders."  CUMULUS has sought and received (on FEBRUARY 8th) approval of payments under four incentive compensation plans for the last quarter of 2017, the full year 2017, and for 2018; 2017 payments are estimated at between $8.64 million and $9.61 million, with 2018 projected at $10.81 million.  The company has also sought approval of two additional "Executive Plans" estimated at between $4.2 million and $4.8 million in 2017 and projected at $3.51 million for first and second quarters of 2018.  The court approved the plans for all but six participants.

A statement issued by CUMULUS this morning (2/14) said, "The objection filed last night has absolutely no impact on the authorizations the Court gave the company on February 8th to pay incentive compensation for employees who earned it in 2017, or will earn it in 2018.  We will be making our incentive compensation payments to those employees, beginning with this week's normal payroll cycle. The objection filed is common in these situations and applies only to a small number of senior executives whose compensation will be addressed at an upcoming hearing on MARCH 12th."

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