GT Advanced Technologies was to supply Apple with scratch-resistant sapphire glass, but announced Oct. 6 it's filing for Chapter 11 bankruptcy.
GT Advanced Technologies, the New Hampshire company now in bankruptcy after a deal to supply Apple with sapphire flopped, has asked a federal judge to approve a plan that would pay senior executives and other employees US$3.7 million in bonuses, according to court documents.
The bonuses are necessary, GT said in a filing Monday, because its stock has tanked since the company went into Chapter 11 on Oct. 6. Previously, major parts of bonuses were paid in stock grants. "The grant of equity incentive awards during these bankruptcy cases would be likely to result in no value to the senior management employees," GT's lawyers said.
GT wants to set up a cash incentive plan for nine senior executives and an additional 28 employees that would distribute a total of $3.7 million if the plan's targets were met. The senior executives would get the bulk of that money, $2.3 million, or about 62% of the total.
Those senior executives were not named in the filing, but would probably include the seven listed on GT's management team page, and include CEO Tom Gutierrez and COO Dan Squiller.
For those nine upper-level executives, bonuses would be calculated using a formula with several components, including sales of the sapphire-growing furnaces the company owns in the Mesa, Ariz. factory where production never reached either the volume or the material quality required by Apple, GT's partner in the doomed project. Some of the proceeds from the sale of those furnaces will go to Apple to repay its $439 million loan to GT.
The more furnaces GT sells from that factory, the larger the bonuses paid to the executives.
The other 28 employees in the plan are crucial to the survival of GT, the motion said, and if the deal is approved will be given retention bonuses of between $10,990 and $125,000 each. GT said those employees include engineers and R&D staff.
"GTAT is facing challenges with respect to retaining and motivating its current workforce," the company's lawyers argued. "Indeed, GTAT has already lost 25 valued employees as a result of voluntary attrition since the [bankruptcy filing], and believes that, without a thoughtful retention plan for such key non-insiders, it may continue to lose valuable talent to the detriment of GTAT's operations."
GT has another bonus plan in place that would pay 173 additional employees a total of $1.95 million in the first quarter of 2016 if individual performance targets have been met.
Although GT's creditors have yet to respond to the newest incentive plan, GT expects them to oppose it, and asked for an expedited hearing next month. The federal bankruptcy court judge overseeing the case set that hearing for Jan. 23.
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