Mission Coal Company – Seeks Approval of KEIP and KERP

November 28, 2018 – Mission Coal Company requested Court approval of a Key Employee Incentive Plan (the “KEIP”) and Key Employee Retention Plan (the “KERP”) [Docket No. 354]. The motions states, “The Debtors are thinly staffed and therefore are disproportionately burdened by the loss of any employee. Since the Commencement Date, the Debtors have struggled to meet operational and financial targets as critical employees depart in increasing numbers. Additionally, the closure of operations at Pinnacle Mining Complex has depressed employee morale and contributed to an increasingly fragile work environment. The risk of losing even more critical employees is very real and such further losses would put the Debtors in jeopardy of being unable to consummate their restructuring goals, to the detriment of all stakeholders.”

 

 

“The Debtors seek approval of the KERP for 40 of the Debtors’ noninsider employees (out of a population of approximately 796 employees, or approximately 5% of the Debtors’ total employee population) that the Debtors have determined are essential to the Debtors’ business operations (the ‘KERP Participants’). The total amount potentially available for payment under the KERP is $1,122,530.87. The KERP has been tailored to ensure that the KERP Participants remain employed with the Debtors through these chapter 11 cases. Each KERP Participant will be entitled to a payment equal to 20-65% of their annual base salary, prorated for six months (i.e., the term of the Debtors’ DIP Facility and projected length of these chapter 11 cases), with an effective rate of 10-32.5% of the KERP Participants’ annual base salary.”

The KEIP

“Each of the KEIP Participants play a crucial role in the management of the company, and more specifically in connection with maximizing value through the Debtors’ ongoing sale process….The KEIP has been tailored to incentivize the KEIP Participants to maximize value for the benefit of all stakeholders through the pendency of these chapter 11 cases. In particular, the KEIP provides a bonus payment upon achieving either (a) the sale milestones under the DIP Facility or (b) an optimal sale price in connection with the sale of substantially all of the Debtors’ assets. As set forth below, each KEIP Participant will be entitled to the greater of either: (a) 100% of the target bonus payment if the sale milestone metric is met, or (b) 90 to 110% of the target bonus payment depending on the ultimate sale price. In the case of the sale price metric, the KEIP will be earned upon obtaining a purchase price of up to $180 million, $205 million, or $220 million, in each case net of any cash required to fund priority and administrative expense claims, in an amount to be mutually agreed upon prior to closing between the Debtors and the DIP Lenders. The General Counsel and Vice President of Human Resources’ target bonus is based on 100% of his base salary, and The Vice President — Accounting’s target bonus is based on 75% of his base salary, in each case prorated for six months (i.e. the DIP maturity and targeted length of these chapter 11 cases).”