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For week ended June 27, 1999 Posted 26 Jun 1999

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Judge leery of Geneva bonus plan

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 year.

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.

Copyright 1998, 1999, 2000, 2001 Kent Larsen · Privacy Information