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Midway Offers Incentives If Firm Sold For $30 Million
by Kris Graft
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April 15, 2009
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Bankrupt Mortal Kombat house Midway Games hopes to sell off its assets for "at least" $30 million in total, bankruptcy filings viewed by Gamasutra reveal.
Achieving that "target amount" is one of two milestones within Midway's revised key employee incentive plan (KEIP), which a court approved on April 6.
If eligible participants in the KEIP are able to - with a court's approval - sell off the company's assets to a bidder or bidders, and generate net sale proceeds surpassing the $30 million mark, they're entitled to partake in a cash reward pool of "not more than $600,000."
A second supplemental milestone requires key personnel to either come up with a court-approved plan to reorganize or liquidate Midway in a manner that is "acceptable to the lender," or formulate a plan that allows the company to pay off the lender's secured claims.
Employees could also meet the second milestone by closing the sale of company assets in an auction. The filing said that if the company's net sale proceeds met the $30 million mark, Midway will pay key personnel $1 million once the sale of the company closes, plus the $600,000 from the first milestone. For every $1 million over the target sale mark, eligible employees stand to earn an additional $75,000.
The filing said that Midway determined the bonus amounts by considering "the level of payment that is necessary or appropriate to provide an economic incentive for each Participant to exert additional efforts beyond his/her normal duties on behalf of the Company," among other reasons.
The payouts will likely be considerably less than those proposed in the original KEIP, proposed in March, in which 28 employees were poised to divvy up $3.75 million in bonuses.
Creditors and a U.S. Trustee overseeing Midway's bankruptcy found the terms of that original plan unacceptable. Midway subsequently submitted the current revision, which a bankruptcy court approved last week.
In February, Midway filed for Chapter 11 to alleviate pressure from creditors - bond owners to which it owes $150 million after the departure of former majority stakeholder Sumner Redstone triggered a buyback obligation. To make matters worse, the publisher's debts compound to $240 million in the face of its inability to fulfill the obligation.
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These 'managers' don't deserve a bonus of any kind.