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Any corporate lawyers onboard? What do regular comp/bonus contracts look like?

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halik

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Oct 10, 2000
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I've been wondering about this since the whole AIG debacle, how are bonus contracts structured on the high end? Do these turn into Liabilities in chapter 7 and satisfied first?
 

blackangst1

Lifer
Feb 23, 2005
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Many times yes, because is falls under salary. Its more complicated than that, and Im sure others will chime in. But many "bonuses" are actually contracted salaries. For instance Steve Jobs (Apple) and Edward Liddy (AIG) had annual salaries of $1, with large bonuses built in. This is done to avoid taxes (some).
 

halik

Lifer
Oct 10, 2000
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Originally posted by: blackangst1
Many times yes, because is falls under salary. Its more complicated than that, and Im sure others will chime in. But many "bonuses" are actually contracted salaries. For instance Steve Jobs (Apple) and Edward Liddy (AIG) had annual salaries of $1, with large bonuses built in. This is done to avoid taxes (some).
Right,
my bonus was completely discretionary, it said on the contract itself (bulge bracket ibank). I'm assuming that execs get contractual bonuses, since there were mentions of lawsuits and contractual obligations.

I'd like to know if these people get the bonuses even in Ch7, because that's de facto what the TARP bailout prevented.
 

microbial

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Oct 10, 2008
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Why not go after AIG manager salaries? I don't understand why the Fed didn't leverage any stimulus bailout money against salaries for the corporate heads.

Forget even talking about the bonuses, these people should have been punitively docked a large portion (like all except what the lowest wage earner in their firm makes) of their pay schedule retroactively.

Punishment should have been part of the bailout. The problem is that the treasury department are all creatures of wallstreet--and they can't conceive of punishing their own kind...but there is no justification for these failed master of the Universe to even get their base compensation.
 

sactoking

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Sep 24, 2007
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Originally posted by: halik
I've been wondering about this since the whole AIG debacle, how are bonus contracts structured on the high end? Do these turn into Liabilities in chapter 7 and satisfied first?
I'm not an attorney, but my research leads me to believe that Congress amended the Bankruptcy Code in 1978 to give each employee of a company in Chapter 7 liquidation 'priority' status for up to $10,000 in unpaid wages and benefits.

If that's true, I think that first to be paid would be the secured creditors. Next to be paid would be the 'priority' unsecured creditors. Each person owed a bonus could get $10,000. After that, the bonus seekers would be lumped in with the general unsecured creditors. Finally, equity holders would be paid.
 
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