Summarized by Kent Larsen
Judge leery of Geneva bonus plan
Deseret News 24Jun99 L4
By Dennis Romboy: Deseret News staff writer
Troubled Geneva Steel is searching for a way to retain top executives and
managers while trying to reorganize under Chapter 11 of the US Bankruptcy
code. US Bankruptcy Court judge Glen E. Clark delayed deciding on a
proposed bonus and severance plan for the 36 executives and managers at the
plant. The plan gives managers a 25 percent bonus when the mill emerges
from bankruptcy and gives executives up to 75 percent of their salaries.
The total value of the bonuses is expected to be $1.2 million, but could be
as much as twice that amount.
Since Geneva Steel sought bankruptcy protection in February 18 managers
have left and others are circulating resumes. Three executives have also
left, and one of the remaining six has received a job offer. "If we have
one or more depart at that level, it would be devastating to the management
team," said Geneva Chairman and CEO Joe Cannon. Cannon earned $487,708 last
But the mill's workforce, represented by the United Steelworkers of
America, thinks that the managers shouldn't need the bonuses, "This is
simply an extra goody that's been decided will be there whether it's needed
or not," said union attorney Richard Seltzer. He says approval of the plan
would diminish the morale of the workers. 938 Geneva employees signed a
petition opposing the bonuses. "It's not the time to in effect favor one
group of employees over another," said Seltzer.
Geneva's outside financial consultant, Tim Coleman says that 'management
retention' plans are common in Chapter 11 cases. He says the costs will not
reduce the company's ability to reorganize.
Geneva Steel is an indepented mill located in Utah County, Utah. The
majority of its employees and managers are members of the LDS Church.
It is one of the largest private employers of members of the church.