NEW YORK -- Four senior officers at The Leslie Fay Cos. could double their wages under a new employee incentive compensation and retention plan put forth by the company.
The plan, which must be approved by Bankruptcy Judge Tina Brozman before it takes effect, rewards the firm's top executives if they succeed in turning around the company, which has been in Chapter 11 since April 1993.
The executives included in the plan are: Michael J. Babcock, president and chief operating officer; John S. Dubel, senior vice president and chief financial officer; Laura H. Pomerantz, executive vice president, Theo Miles and Castleberry divisions, and John Ward, senior vice president and chairman of Leslie Fay's Dress and Sportswear group.
Under the compensation plans, beginning May 31, Babcock and Dubel would receive up to 40 percent of their salary in bonuses if the company achieves its targeted operating goals as put forth in its three-year business plan. If the firm exceeds the 1994 projection of $17 million, the two executives' bonuses would grow to as much as 60 percent of their salaries.
A third provision would pay Babcock and Dubel an additional 1 percent of any operating profit over $30 million. All three incentive provisions are capped at 100 percent of base salary.
The contracts of Pomerantz and Ward contain incentive clauses based on the performances of their respective divisions in addition to the company as a whole. The language of the contract says Pomerantz and Ward can earn bonuses equal to 200 percent of their base salaries.
As reported, Babcock has an annual salary of $700,000, Dubel $350,000, and Pomerantz $425,000. Ward has been without a written contract since Dec. 31, 1993, but according to the new compensation agreement, he is set to earn $500,000 per year.
Aside from implementing monetary incentives based on the company's performance, the motion seeks to extend the executives' contracts through May 1996. If the company attains certain operating levels in 1994, the employee contracts of Babcock, Dubel, Pomerantz and Ward would automatically be extended through May 1997.
Leslie Fay said that the programs were necessary to reward senior officers who have "won back" customers who had either ceased to do business with the company or greatly reduced their orders following disclosure of Leslie Fay's accounting scandal, which resulted in the firm's bankruptcy. The possibility executives could be lured away by other companies was also cited.
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