U.S. BANKRUPTCY COURT Judge OKs incentive plan for 33 key WCI employees

Lawyers say WCI's parent company has agreed to chip in $5 million more.
THE VINDICATOR
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- WCI Steel will promise hefty severance payments to 33 employees believed to be essential to the steel mill's survival, part of a controversial employee retention plan approved Tuesday in U.S. Bankruptcy Court.
Judge William Bodoh said he believes the plan to set aside $1.49 million for the incentive program is a "reasonable exercise of business judgment" for WCI, which filed for Chapter 11 bankruptcy protection in September.
Key employees would receive lump-sum payments only if they lose their jobs through no fault of their own. That could happen if the mill closes or is bought by a new owner, or if their job was eliminated as part of the company's reorganization effort.
The judge said he supports the use of company assets to assure that essential employees do not "jump the ship" during the crucial restructuring period.
"In nearly 19 years we've watched too many Chapter 11 debtors die on the vine when their key personnel left to take other jobs," Bodoh explained.
Confidentiality
He also approved WCI's request to keep the names, titles and salaries of the key employees confidential.
Christine Murphy Pierpont, an attorney representing the company in its bankruptcy case, said the confidentiality is mainly to keep WCI's competitors from trying to steal away crucial employees, but she acknowledged it also protects the workers' privacy.
WCI spokesman Tim Roberts said Ed Caine, president and chief executive, is not one of those who will benefit from the incentive plan. Most of the 33 have specialized technical skills or have cultivated valuable relationships with customers, he said.
Union reaction
But union leaders reacted angrily to the plan's approval.
"It's not acceptable to the members, and we're very disappointed," said Pat Caraway, vice president of United Steelworkers of America Local 1375, which presents about 1,400 hourly workers at WCI.
"We believe that some of these 33 got us in the position we're in today. They don't deserve a bonus, and that's what we're calling it."
Caraway and another union spokesman, Gary Gosser, president of the local's office and clerical unit, argued that all assets should be used to keep the mill operating, for the sake of the workers as well as the community. They also criticized the decision not to reveal the key employees' names.
Roberts argued that it is inaccurate to call the severance payments a "bonus" because they will not be paid unless a key worker loses his or her position.
Renco increases offering
In another matter, Pierpont said Renco Group, WCI's parent company, is offering to lend the Warren mill $15 million to continue operations as it works to emerge from bankruptcy. Renco originally offered $10 million but has increased its planned contribution, she said, indicating its continued support for the company.
WCI is already drawing operating funds from a $100 million loan package provided by a group of lenders led by Congress Financial Corp. and Bank of America and approved by the bankruptcy court in October. The Renco financing plan will be on the court docket for approval sometime in January.
A hearing is set for 9:30 a.m. Tuesday on a motion by WCI's secured creditors to recover a $5 million quarterly pension contribution the company paid last month for its retiree pension plan. The creditors maintain that Renco Group is ultimately responsible for the payments and that WCI can't afford to make them right now.
vinarsky@vindy.com