Relativity Media had largely resolved the U.S. Trustee’s objections to its payment plans for key employees in a negotiation it told the U.S. Bankruptcy Court this morning. The only dispute today was what financial information should be kept private — which Judge Michael Wiles settled by siding with the studio’s plea to keep specific potential payments under wraps. “In the real world [salaries are] regarded as confidential commercial information,” he said.
At issue were two plans to pay key executives and employees needed to keep Relativity going while it struggles to emerge from Chapter 11 bankruptcy protection.
Specific dollar amounts for top executives — especially Relativity Television’s Thomas Forman and Andrew Marcus — are “commercially sensitive” and could violate their privacy, the studio’s lawyer Craig Wolfe says. “It would be possible to back into what the individual’s annual salararies are” and that “could harm their ability to negotiate salaries.”
He added that a particularly aggressive creditor who had contacted the company raised “some concerns” about people’s safety.
The U.S. Trustee said that some of the bonus information was already disclosed in a previous motion, and often is disclosed in other bankruptcy cases. Although the Trustee is aware of the “persistent and aggressive” creditor, Relativity hadn’t raised its safety concerns in its private negotiations.
Wiles said he would not rule on the safety matter because “I have no evidence” about a potential threat.
Before today’s court session Relativity agreed to changes in its payment plans to address the Trustee’s concerns.
The company moved one person – Relativity Music President Robert Bowen — from the general employee group into the one for key employees. The studio now wants $580,122 for the group of eight top execs – including President Tucker Tooley, Managing Director Carol Genis, and COO Greg Shamo — whose performance will be judged by sales.
Another $655,000 would be earmarked for Forman and Marcus who will be judged by a collection of TV-related metrics. Chief Restructuring Officer Brian Kushner says that the two “have spent significant amounts of time working with senior executives [at various TV networks] to get them comfortable that their television shows will continue to be timely produced with the same quality as before if they continue to fund their licensing fee payments.”
The allocations for the 10 could represent 7.6% of their annual salaries, but only if they stick around through the sale. That average is “significantly lower” than the average in similar bankruptcy cases, Kushner says.
About $345,390 would also be available in a separate plan for 71 key non-insider employees. That could come to about 3.1% of their base salaries which, Kushner says, “is significantly lower than the average of 27.6% and median of 26%” in other comparable cases.