Foamex gets court OK for key employee retention program, severance plan

By Caroline Salls

Pittsburgh, Nov. 17 - Foamex International Inc. obtained approval of a key employee retention program and severance plan, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The retention plan will cover 77 employees "who have been identified as particularly important to [Foamex's] successful reorganization. The severance plan will cover all 3,800 domestic full- and part-time salaried and hourly employees who were employed by Foamex on its Chapter 11 filing date.

Group one in the retention plan includes 65 of the company's non-executive employees and three senior executives. Group two includes six senior executives, and group three includes the company's three most senior executives, including the chief executive officer.

Group one employees will receive formula-driven cash distributions based on 15% to 40% of the employee's annual salary.

Group two and group three employees will receive their distributions in cash, provided, however, that at the sole discretion of the reorganized company's board of directors, 25% of the group two employees' distribution and 50% of the group three employees' distribution can be made in stock in the reorganized company.

The group two and group three bonuses will range from 50% to 125% of the employee's salary.

The company estimates the total cost of the retention plan will be $3.7 million, with an all-in cost of $4.3 million.

Under the severance plan, employees will receive payments based on time of service, including:

• Executive vice president will receive 52-weeks payment, or 39 weeks if less than 18 months of service;

• Senior vice president will receive greater of 39 weeks or two weeks for each year of service, with a maximum of 52 weeks;

• Vice president will receive greater of 26 weeks or two weeks for each year of service, with a maximum of 52 weeks;

• Director of plant manager will receive two weeks for each year of service, with a maximum of 40 weeks;

• All other salaried employees will receive one week for each year of service, with a maximum of 26 weeks.

Hourly employees with zero to one year of service will receive one week severance; employees with one to five years of service will receive two weeks of severance; employees with six to 10 years of service will receive four weeks of severance; employees with 11 to 15 years of service will receive six weeks of severance; employees with 16 to 20 years of service will receive eight weeks of severance; and hourly employees with more than 21 years of service will receive 10 weeks' severance.

Foamex, a Linwood, Pa., manufacturer and distributor of flexible polyurethane and advanced polymer foam products, filed for Chapter 11 on Sept. 19. Its case number is 05-12685.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.