MF Global plans bonus payouts for 3 executives

Three top executives at MF Global Holdings Ltd kept on since the commodities firm's collapse could receive performance-based bonuses under a retention plan being prepared by a court-appointed trustee, people close to the trustee said. Trustee Louis Freeh plans to ask a bankruptcy judge to approve the employment agreements, said these people, who spoke on condition of anonymity because the plan is still being crafted.
The plan will include bonus payouts for Chief Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri Steenkamp if they meet certain targets. The formation of a plan does not necessarily mean bonuses will ultimately be paid or that the executives will earn as much total compensation as they have in the past.
Still, it has garnered attention from at least one key politician. Senator Chuck Grassley, the highest-ranking Republican on the Senate Judiciary Committee, said in a statement it was "hard to believe that Mr Freeh would consider bonuses to these select few while customers and investors are still trying to recoup their losses." Abelow, Ferber and Steenkamp are among a handful of employees asked to stay on after MF Global's October 31 bankruptcy to help Freeh, a former director of the US Federal Bureau of Investigation, recover assets to be paid out to creditors.
The retention plan will set out the terms of that employment, and performance-based incentives will be an aspect of that plan, one of the people said. But the employees are still likely to make less money than they did last year due to overall pay cuts, the people said.
For example, Abelow, whose salary had been more than $800,000, is now working for $60,000. The bonuses will also not necessarily be approved by the bankruptcy court. Once the retention plan is filed, parties will have a chance to object ahead of a hearing to determine the plan's merits.
MF Global collapsed after it was forced to reveal it had bet billions on European sovereign debt, a disclosure that led to credit-rating downgrades and unnerved investors. CEO Jon Corzine resigned days later. An adviser at Freeh's consulting firm, which is handling the MF Global case, confirmed that a retention plan is in the works, but would not offer detail on bonuses. The adviser, Frank Piantidosi, said that MF Global - and therefore creditors - benefit from the retention of Abelow, Steenkamp and Ferber.
"In fact, it would cost more to the estate to replace them with outside consultants who would be less familiar with the firm's operations," Piantidosi said. An attorney for Freeh said retaining employees is "the most cost-effective way to effectuate the liquidation" of MF Global's estate. But Bill Brandt, chief executive of turnaround firm Development Specialists Inc, does not buy that argument. Brandt, who is not involved in the case, said judges in many districts have stopped allowing bonuses for executives of bankrupt firms.