According to the U.S. Bankruptcy Court docket, SFX Entertainment filed a motion to implement (i) a key employee incentive plan (KEIP) and (ii) a key employee retention plan (KERP).
The motion explains, “As a preliminary matter, this Motion does not relate to the proposed incentive compensation programs in respect of the sale of certain of the Debtors’ discrete non-core business units (the ‘NCUs’), as may be designated by the Special Committee of the Board of Directors of SFX Entertainment, Inc. (the ‘Special Committee’). The NCU Key Employee Programs proposed by the Debtors on March 2, 2016 [Docket No. 173] relate only to the NCUs and the necessity to properly incentivize and retain employees to assist in the maximization of value of the assets held for sale.”
The motion continues, “The instant Motion seeks approval of the key employee programs that relate to the businesses the Debtors anticipate retaining.” The motion continues, “Payments under both KEIPs will not exceed $200,000 per KEIP Participant, or 80% of annual base salary, with proposed target payments ranging from $60,000 to $150,000 and maximum payments ranging from $110,000 to $200,000. In the aggregate, the proposed target cost is $975,000, with a maximum total cost for the nine (9) currently and tentatively identified KEIP Participants of $1.5 million….The assistance of the KEIP Participants will be critical to the Debtors’ ability to drive an expeditious chapter 11 process and maximize value for the Debtors’ estates….In addition to the KEIPs, the Debtors also seek to implement the KERP for certain individual non-insider employees, in order to ensure that the Debtors do not suffer significant and costly turnover of key employees during the Debtors’ restructuring efforts…the aggregate cost of the KERP will not exceed $450,000.”
SFX further notes, “Moreover, the average cost per KERP Participant is $13,801….The KERP Participants are critical employees who have the knowledge and experience to carry out the decisions of management in an efficient and effective manner, but will not be individuals who manage or control the Debtors’ businesses.” The Court scheduled an April 5, 2016 hearing on the motion.
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