EaglePicher requests approval of key employee retention plan

By Caroline Salls

Pittsburgh, July 20 - EaglePicher Holdings, Inc. requested court authorization to implement a key employee retention bonus and severance pay plan, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of Ohio.

According to the motion, "the managers and employees play a key role in ensuring that [EaglePicher's] businesses operate efficiently.

"A loss of key personnel could have disastrous effects on the [company's] ability to accomplish their reorganization efforts."

EaglePicher said it has already lost a number of key employees because of its bankruptcy filing, but had been able to prevent others from leaving based, in part, on the promise of a key employee retention program.

The plan provides for payments designed to retain 155 essential employees, who have been split into three benefit tiers, according to the filing.

The total cost of the restructuring bonuses is $7.9 million.

For the three tier I employees, the average benefit will be 160% of their salary; for the six tier II employees, 93% of their salary and for the 146 tier III employees, 27% of their salary.

In general, employees who remain with the company through confirmation of a plan of reorganization will receive payments under the retention plan.

Exceptions will include involuntary termination without cause, for which employees will receive full payment following termination; death or disability, for which the employee or his or her estate will receive a payment for the period worked at the time the payment would otherwise be paid; termination as a result of the sale of a business, for which the employee receives full payment 60 days following the close of the sale if the employee stays with the new owner; and termination for good reason, for which the employee receives full payment following the termination.

If a plan of reorganization is confirmed before March 1, 2006, tier I payouts will be 100%. If the plan is confirmed June 30, 2006 or after, tier I payouts would be 66.67%.

Tiers II and III payments will be staggered with 15% paid six months after filing and the remaining 85% shortly after emergence through confirmation of a plan of reorganization.

The plan also proposes a reserve of $250,000 for future allocation to individuals not currently included in the program, with no one employee to receive more than $50,000.

All salaried employees are covered by existing severance policies, according to the filing.

EaglePicher, a Phoenix-based diversified manufacturer, filed for Chapter 11 on April 11. Its case number is 05-12601.

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