Matthew Daneman explains the current situation with Kodak. The U.S. trustee for Kodak’s Chapter 11 bankruptcy case filed an objection this week in bankruptcy court against the company’s employee continuity plan. Kodak filed a motion on April 4, seeking court approval to pay a total of $8.5 million in retention bonuses to 119 mid-level and upper-level executives and an additional $5 million to other employees as needed. U.S. Trustee Tracy Hope Davis, argued that there aren’t enough guarantees that bonus money won’t go to insiders, in her objection. The hearing for the retention bonus plan will appear in court on Monday, April 30, 2012.
These bonuses are designed to provide continuity when there is potential uncertainty about an employee’s continued employment at the company. The bonus lets employees know their employer wants them to complete the project or, in the case of a merger, to stay until a specified date so that critical activities can continue without disruption. Retention bonuses are usually about 10 to 15 percent of salary. This being said, Kodak is giving their employees as much as they can while the bankruptcy is going on.