Tuesday, December 24, 2002
The company suggested executive bonuses that are too high, a union lawyer says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- A $200,000 payment is too much to give the president of Cold Metal Products for burying the company, two lawyers said.
The failed steel processor wants to dangle the payment before Raymond Torok to keep him on board as the company sells its plants and other assets.
That amounts to a burial bonus, David Jury, a lawyer for the United Steelworkers of America, told a bankruptcy court judge Monday during a hearing on a proposed employee-retention plan.
Too many companies are coming to bankruptcy courts seeking large payments for executives just before they go out of business, he said. Such payments are an insult to hourly workers who have lost jobs at these companies, he said.
This particular request is unfair because Torok stands to get the bonus for one month's work, said Sean Malloy, a lawyer for unsecured creditors. The company's plants might be sold next month.
Torok would receive the biggest payment in a plan that would pay $650,000 in bonuses.
"It's simply too rich of a retention plan," Malloy said.
Lawyers weren't the only ones protesting.
Torok already is making enough money for him to see the company through its last stages, said Al Leo, who lost his job as facilities support services manager when Cold Metal closed its Campbell plant. Torok was paid $311,000 in the company's most recent fiscal year.
If Torok doesn't want to stay around, the company has others who could oversee the sale process, Leo said.
"They have a plethora of attorneys who have the expertise to sell this company for them," he said.
Cold Metal doesn't see it that way.
It proposed the bonus plan for Torok and 29 other workers because it says it needs them to complete a sale of company assets, which will help the company's creditors recover as much money as possible. The plan is supported by the company's main creditor, GMAC Financial Services.
Marc Merklin, a Cold Metal lawyer, told the judge the plan is essential to keep the employees working and added that some already have left the company.
The payment is for more than one month because workers have stayed on the job knowing Cold Metal was proposing a bonus, he said.
Judge William Bodoh delayed ruling on Cold Metal's motion because changes to the request were made Friday and hadn't been seen by all lawyers.
Originally, the plan called for 30 employees to split $650,000 once they were let go by the company. Amounts were to be determined by the board of directors.
Adjustments
The plan was changed to separate Torok and Joseph Horvath, chief financial officer, from the other 28 employees.
Members of the larger group would share $370,000 if they were let go.
Torok and Horvath, who stands to receive $80,000, would be paid only if they secure a letter of intent or a purchase agreement from a buyer by next month.
Jury said these performance requirements were too low.
Cold Metal, which filed for bankruptcy protection in August, is being forced by its lenders to sell its plants in Ottawa, Ohio; Roseville, Mich.; Indianapolis; and Canada.
It already has closed its Campbell plant, which employed 116, and was seeking to hire a company to sell the plant's inventory. That motion was postponed Monday, however, to give former employees a chance to buy the plant.
Torok said after the hearing that the effort has a "reasonable shot" of succeeding.
Former workers have hired a consultant who is trying to find investors and lenders who would support them.
Although more than 20 companies have expressed an interest in Cold Metal's other plants, only the former workers have inquired about the Youngstown-area plant, Torok said.