Microsoft founder's cable company goes Chapter 11; establishes millions in exec bonuses

Charter Communications, headed by Microsoft co-founder Paul Allen has filed for Chapter 11 bankruptcy protection. Charter says it is the nation's fourth largest cable company and that it will be shedding $8 billion in debt by restructuring. The company originally announced it was seeking Chapter 11 protection on February 12 and today announced details of its plans. It will continue operations as it restructures.

Allen, who is also owner of the Seattle Seahawks and Portland Trailblazers, holds about 35% of the shares of Charter, according to the company's latest annual report (10-K) filing with the SEC. He is the chairman of the board and he will continue to be the company's largest stakeholder.

In accordance with the greedy trend of the times, it seems that one of his company's first orders of business, was to ensure that Charter's top execs were adequately set up in their golden parachutes and post-bankruptcy bonuses. According to an SEC filing on March 12, 2009, they will qualify for giant hunks of cash if the company reemerges from bankruptcy, and potentially, even if it doesn't, or they are terminated. The bonuses are: CEO Neil Smit - $6 million; COO Michael Lovett - $2.38 million; CFO Eloise Schmitz - $765,000; and don't forget the lawyer, general counsel Grier Raclin - $765,000.

Here is the precise wording regarding these bonuses:

"The [Restructuring Value Program (the “RVP”)] provides incentives to encourage and reward participants for a successful restructuring of the Company.  Participants who continue to be employed by the Company or its subsidiaries until payment of RVP awards earn payments under the RVP upon either (i) the Company’s emergence from its Chapter 11 restructuring proceeding (the “Proceeding”) or (ii), if the Company’s restructuring plan is the Joint Plan (as defined in the Plan), when the Commitment Fees under the Joint Plan are first payable.  Participants also earn their RVP payments upon an earlier of (i) their termination of employment due to death or disability, or their termination on or after the Company’s emergence from the Proceeding by the Company for a reason other than “cause,” or voluntarily due to a “good reason” (as each such term is defined in the Plan) or (ii) a “change in control” of the Company if they are then employed by the Company or its subsidiaries. The target RVP awards for the Company’s named executive officers as of the date hereof (which are subject to change in accordance with the terms of the Plan) are: N. Smit - $6 million; M. Lovett - $2.38 million; E. Schmitz - $765,000; and G. Raclin - $765,000.

But wait, there's more! These executives may qualify for yet another set of bonuses which are labeled as the Cash Incentive Program. Here are the amounts: Smit - $2.5 million; Lovett - $910,000; Schmitz - $664,000; and Raclin - $597,000.

The best job in America these days has to be executive of a large publicly traded company. Doesn't matter how you perform, the cash just keeps a-flowin'.

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