Poll respondents say incentive bonus payments should be barred

By Caroline Salls

Pittsburgh, Sept. 1 - The American Bankruptcy Institute said a majority of respondents to a recent online poll agreed that incentive bonus payments subvert the new bankruptcy law's intended limits on retention bonuses for executives operating companies under Chapter 11 protection and that such payments should be barred.

According to an institute news release, 51% of poll respondents agreed strongly, while 20% somewhat agreed that the incentive bonus payments to executives sidestep the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and should be denied.

By contrast, 11% of respondents strongly disagreed and 8% disagreed somewhat that the trend of incentive bonus payments skirts the new bankruptcy law's provisions governing executive compensation.

The release said 9% of the respondents did not know or had no opinion on the issue.

The institute said the poll was based on recent Chapter 11 cases in which bonus payments to company executives were performance-based and labeled as incentive bonus payments rather than retention bonuses.

Section 503 of the act essentially prohibits retention bonuses, according to institute; however, because the act does not contain specific language addressing incentive bonus payments to key employees, a few companies have used this as a way to pay key employees under the label of incentive bonuses.

This latest institute Quick Poll was open to the public for voting from Aug. 25 to Aug. 31.

The American Bankruptcy Institute is an Alexandria, Va.-based multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency.

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