Deputy Chief Restructuring Officer Luke Schaeffer wrote to support Relativity’s proposal to earmark bonus payments for several key employees, and separate ones for unidentified non-inside employees. At issue for the key employees is whether they’d still do their jobs without extra cash.
Schaeffer says he created one set of criteria, which he calls “Sale Metrics,” to determine how much to pay President Tucker Tooley, Co-COO Greg Shamo, CFO and Co-COO Andrew Matthews, Managing Director Carol Genis — and others whose names were redacted. That amount had been set at $314,868, but the filing says the pool for the group “will be increased” to an amount redacted in the public filing.
But the pool “will not be fully funded” unless someone offers at least $8 million more than the $250 million bid made by a group of creditors known as Stalking Horse Bidders.
Recipients could make 22.6% more than they would have, but it gets squishy. “To further ensure that the participants work their hardest and perform at their peak,” the filing says, Chief Restructuring Officer Brian Kushner and others can adjust the payments “either up or down by considering the quantitative and qualitative elements of each Key Employee’s efforts.”
There’s more: The Key Employees also include Relativity Television CEO Thomas Forman and COO Andrew Marcus. They’ll be eligible for a a separate incentive payment pool — here, too, the amount was redacted — that Kushner will allocate based on “TV Metrics” including the operation’s cash receipts.
Why the separation? Forman “has at no time had any management role or control with respect to Relativity Media,” the parent company, the filing says. But he and Marcus “have the ability to influence that segment of [Relativity’s] business more than the overall group of companies.”
They need special consideration, Schaeffer says: “Relativity Television is one of the most important assets being considered by potential purchasers.” If they do their jobs well, then it’s “expected to result in higher bids” at the auction planned for next month. (Well, maybe not so much for Forman: His contract “contains a requirement to provide 90 days’ notice of his intent to leave the company.”)
The filing says that the bonuses are critical. “Several of the Key Employees have received job offers that have even been publicized in the news media, resulting in the resignation of one similarly situated senior employee.”
As for the other, so-called non-insider employees: A pool for their bonuses was reduced to $381,103 from $589,126. There are only 73 people in this group now after three employees left the company, and Relativity moved four to the Key Employees group.
The company responded to some objections raised this month by the U.S. Trustee, who represents the Justice Department in the U.S. Bankruptcy Court proceeding. It said, among other things, that the studio had not proven “that none of the recipients…are ‘insiders’.”
Schaeffer urges the court not to be fooled by employees’ important-sounding titles including “vice president” and “director.”
The large group with “officer-sounding titles is a result of how this group of companies historically operated,” he says. “Like many companies that provide impressive titles to employees to provide them with greater credibility in sales and marketing positions or in lieu of pay raises or similar reasons, [Relativity has] done the same. This is typical in Hollywood. Most of the titles have been given to mid-level employees who have insufficient control over any aspect of [Relativity’s] businesses to give rise to insider status.”
Indeed, he adds, “even the title of ‘president’ does not reflect a high enough level of responsibility or control to merit as the status of ‘insider’.” One example: The president of the Music division “is the only employee of the Music Division.”