The federal judge overseeing Revlon’s bankruptcy signed off on the bankrupt cosmetic’s giant’s request to pay potentially tens of millions of dollars in incentive bonuses for key employees.
That includes up to $21.1 million annually for top executives, with $10.6 million of that maximum set aside for CEO Debra Perelman. The most available for the executives for the full 18 months of the plan is $36.1 million.
The court approval comes over the objection from the U.S. Trustee assigned to the case, who argued that the bonus plan was more aimed at retaining executives than incentivizing their performance, as bankruptcy law requires.
In the objection, the trustee said that the metrics in established in the plan “appear to be designed to maximize the likelihood that [Revlon] will be obligated to make bonus payments to its insider executives who merely need to remain employed while the Debtors achieve lay-up-level EBITDA, cash flow and net sales figures.”
The executive plan had the backing of the unsecured creditors committee in the Revlon case, which includes representatives from its vendor base and other stakeholders.
“This case is particularly complex and difficult. Revlon is a big and important company. This is a ‘free-fall’ Chapter 11, prompted by an acute liquidity crisis and loss of trade support,” the committee said in a filing after evaluating the plan. “Rehabilitating a business of this size, under these circumstances, will take time. But, management is not afforded time.”
The unsecured creditors also noted that Revlon has already lost three key executives, including its CFO.
Revlon has also won approval to pay bonuses to other staffers the company deemed critical to maintaining operations through Chapter 11 and its efforts to restructure.