The Luxembourg-based telecom’s “key employee” bonus program is adequately explained and designed to incentivize senior management, Judge Keith L. Phillips ruled during a telephonic hearing Tuesday at the U.S. Bankruptcy Court for the Eastern District of Virginia.
The ruling puts to rest an objection raised by the DOJ’s bankruptcy watchdog, the U.S. Trustee’s Office, which said the executives’ underlying targets are insufficiently defined. Instead, the bonuses could be used impermissibly to award additional compensation to top managers for simply staying with the company as it restructures in Chapter 11, the Trustee said.
The proposed recipients have incurred additional challenging tasks “while in the midst of a global pandemic,” Phillips said during the hearing. “It’s not a disguised retention plan.”
The bonuses are intended to drive company performance over the remainder of 2020, with a focus on quarterly earnings and clearing the so-called C-band spectrum of airwaves to free up room for 5G, the company said.
Intelsat could earn nearly $5 billion from the U.S. government for meeting Federal Communications Commission deadlines. The funds would “likely constitute a material portion of the overall value to the debtors’ estates and creditor recoveries,” the company said in court filings.
Intelsat filed for bankruptcy in May with about $15 billion in debt, saying it hoped to strengthen its balance sheet and participate in the accelerated C-band clearing. It secured $1 billion in Chapter 11 financing to support its operational and restructuring goals.
The case is In re Intelsat S.A., Bankr. E.D. Va., No. 20-32299, hearing 6/30/20.