GT Advanced Technologies Inc fka GTAT

[LarryAshy]

Debtors' Motion for Order, Pursuant to Bankruptcy Code Sections 363(b) and 503(c), Approving Debtors' Key Employee Incentive Plan and Key Employee Retention Plan

https://www.kccllc.net/gtat/document/1411916141229000000000005

My opinion on the above motion:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=10950847

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UST Objection to the KEIP/KERP:

https://www.kccllc.net/gtat/document/1411916150116000000000013

In a big gigantic nutshell, this seems to me that the UST is not only doing his job to ensure the laws are followed, but he is asking for more specific clarity on the KEIP/KERP. I have mixed feelings on this, because I can easily see both sides of the argument here.

The UST is asking for specifics of the plan and for it to be made public. I can see GTs argument that this may hamper efforts for the sale of assets, and the retention of employees. I am truly an advocate for transparency, but too much may potentially make the effort fall apart.

16. Given the current size of the company, down from more than 1000 employees at the time of the chapter 11 filing to less than 200 at this time, it is likely that the companies identified as peers would no longer be considered as such. The base salaries that were established when the company was considerably larger could be
considered excessive in this market.

Refer to the chart above this quote on the Doc. It is the peer comparison for relative compensation. I agree with the comp in this instance because when compared to similar companies in the industry, the Execs of GT would have to take a massive pay cut relative to the size of the company.

Basing salary on the size of the company would surely expedite the departure of all employees. It would be like comparing the salary of employees at a large national chain of home improvement store to those of a rural mom-and-pop hardware store. Same exact job and purpose. If an employee from the sticks was offered a job at the bigger company doing the exact same job based upon the exact same skills, except for more money and better bennies, I'm sure he would take it.

KEIP/KERP tries to prevent employees from doing such. Keeping the plan sealed prevents other companies from scalping the talent purely by outbidding for them.

A. The Debtors have failed to satisfy their burden of demonstrating that the key employee incentive plan and key employee retention plan are reasonable and necessary.
26. The Debtors’ executives continue to be paid their established base salaries and now seek additional bonuses despite the companies’ poor financial performance and significant post-petition losses.

This goes along the lines of total comp. Their salaries are drastically lowered now for no other reason than the PPS. To retain good talent, you must pay for good talent. The poor financial performance is self-explanatory, and post petition losses are too. If you aren't producing, you aren't earning. If your primary expenditures are legal fees, coupled with no production...of course you are going to incur losses. I disagree with the UST here.

B. The Debtors have failed to meet their burden of demonstrating that the KEIP is primarily incentivizing and, therefore, not subject to the requirements of 11 U.S.C. § 503(c)(1).

I'm not going to show them here, takes up alot of space. Just refer to #'s 27-32.

I absolutely agree with the UST here. He is basically asking GT for hard numbers. He wants to know how much, how many and what exactly the percentage of comp is going to be. Totally acceptable. If you refer to the actual KEIP/KERP Doc, it is very vague.

What I don't agree with is making it public. I disagree with him wanting this unsealed. Doing so could open the door for scalping the talent because it can be calculated how much is necessary to steal key employees away by the competition. Making public their internal discussions on price of sales can easily give an advantage to prospective customers who will try to lowball the offers in an attempt to buy cheap. This totally defeats the initiative to maximize sales to add equity.

33. The fifth KPI, “Advancement of Merlin & Hyperion Strategic Progress” is, by the KEIP’s definition, entirely subjective.
Information regarding what the program is, whether it requires capital funding, whether it generates revenue and its current status is necessary to understand whether “advancing” it can be considered incentive to the insiders

This one is tricky. It is hard to assign a value to this because it is so new and cutting edge. The market doesn't quite know what the potential is for these yet. It would be at best...a guess. Merlin would be a better guess than Hyperion. The UST is asking for info on what the program is. Merlin is pretty self-explanatory, Hyperion is not. Asking about Hyperion any further than what we know now may be opening up a trade secret violation.

I am against GT using this one in the incentive program. This was their job prior to BK. This, other than producing future income to show stability, should have nothing to do with the immediate plans of exiting BK. Is GT trying to say they will drop this program if they aren't compensated? This is their future. If employees do not want to participate, they should just leave now.

#s 34,35 Seem pretty straightforward. Sounds like just a matter of fine tuning some gray area in the plan. The UST sounds like he is looking for more definitive clarification.

#36 was covered above.

C. The Debtors have not met their burden of demonstrating that all of the 28 KERP participants are not insiders of the Debtors, exempting the KERP from the requirements of 11 U.S.C. § 503(c)(1).

#s 37, 38, 39 Are pretty self explanatory. Just sounds like he wants clarification and a more definitive response.

As stated before, and Xena before me, I think this is a matter of the UST just doing his job to ensure the laws are followed. I still have an issue with him wanting the plan unsealed and revealed to the public for the reasons stated.