New York/Rochester, N.Y. - Top Kodak executives, including CEO Antonio Perez, will be paid bonuses if the company gets out of bankruptcy. Judge Allan Gropper approved the payments after a hearing Monday, August 6.
That’s like giving a murder a gun to go out and shoot somebody else,” says Wallace Beebe. Beebe, who retired in 1991 after almost 30 years, says he was so angry at the prospect of the bonuses that he wrote a letter to the judge.
“I don’t know how you enforce a bonus for the people that brought Kodak down to it’s knees,” he says.
Beebe is a third generation Kodaker – his father Wallace worked with chemicals. His grandfather was hired by George Eastman himself. The day he heard the company would file for bankruptcy was a day he thought he’d never see.
“Why should they be rewarded with bonuses while the company struggles to keep afloat,” he says from the living room of his home in Gates. “Why would he (the judge) give them the money when the company needs the money so badly?”
Attorneys argued that were it not for Kodak’s leaders, including Perez, the bankruptcy would have happened earlier and reorganization would be harder.
“Despite the fact that yesterday those managers may have caused the bankruptcy, tomorrow we want them to help fix the problem,” explains George Conboy, an analyst who follows Kodak. “To keep them around you have to compensate them.”
The judge said that bankruptcy laws allow for bonuses and credited Kodak for postponing the incentive plan for top leaders.
Top executives get paid only if creditors do. If they receive 30 cents on the dollar, Perez would receive a top bonus of $2 million, or twice his salary. But Kodak says that is a significant hurdle.
The sale of patents is key to repaying those creditors. A patent auction takes place Wednesday, August 8. The company is hoping to raise $2 billion, but details on the winning bids [and who placed them] won't be known until next week.
Yet retirees are left wondering if the millions paid in bonuses will come at their expense. “Tomorrow they can go ‘That’s it, there’s no more money left,’ and we won’t have any more health insurance,” says Beebe.