Don't think this will become a buy again, just posting this stuff as I find it.
More From The Birmingham News
Bankrupt Vesta given OK to pay execs $74,000
Sunday, August 20, 2006
RUSSELL HUBBARD
News staff writer
Bankrupt Vesta Insurance Group has won special permission to pay a total of $74,000 to six executives for less than a month's work, after having terminated almost one-third of the rank-and-file work force to cut costs.
The Birmingham-based insurer told the court, which must approve all extraordinary expenditures, the six "are critical to the operation" of the company, which is trying to reorganize its finances while negotiating with creditors. The request was granted by U.S. District Court in Birmingham Friday.
The executives include Chairman Norman Gayle, Chief Executive David Lacefield, finance chief John Hines and General Counsel Donald Thornton. Vesta filed for bankruptcy protection this month after its subsidiary firms were found insolvent, bondholders went unpaid and no progress was made on explaining unspecified accounting problems that have kept investors in the dark for almost one year.
The company did say in the court filing it got rid of 110 of 300 employees in early August because it couldn't pay them.
But the top six - who also include Secretary John McCullough and Controller Edwin Meadows - are indispensable, Vesta said. The filing said the group is owed $37,000 for the pay period ended Friday. Another $37,000 will be required Sept. 1.
But that's only half of it: an outside firm hired by regulators that's winding down Vesta's individual insurance subsidiaries has already agreed to pay 50 percent of the executive salaries. That means Vesta's request for $74,000 will be combined with $74,000 from the outside firm, the company said in its court filing.
Combining Vesta's court-approved contribution of $74,000 with the outside firm's identical total shows the executive pay for Aug. 18 through Sept. 1 is $148,000. Court documents don't say who gets what. But if the money is evenly divided, it works out to $24,667 for each of the six for two weeks work.
Attempts to reach officials with Vesta were unsuccessful.
Vesta hasn't yet told the court how much it owes or how much money it has. It was thrown into involuntary bankruptcy last month by unpaid bondholders, but successfully requested that the matter be converted to a voluntary petition.
The company hasn't filed quarterly financial statements with the Securities and Exchange Commission since Sept. 2004, citing unspecified accounting problems. Shares were removed from the New York Stock Exchange this year. They trade for 1 cent. Regulators in Texas, Florida and Hawaii seized Vesta's individual operating companies last month, saying they were broke and couldn't pay claims.
