NEW YORK — After waiting a day to hear the testimony of Michael J. Babcock, president and chief operating officer of The Leslie Fay Cos., a bankruptcy judge Thursday approved the company’s incentive compensation plan for four of its top executives.
Judge Tina L. Brozman said she believed the testimony of Leslie Fay’s witnesses during the two-day hearing that the types of compensation sought by the officers were “within the industry average.”
“What cinched my conclusion,” she said, “was the testimony of Mr. Babcock.”
Leslie Fay has been in Chapter 11 since April 1993.
During Thursday’s two-hour hearing, Babcock told the court that each of the executives who would benefit from the compensation plan were “key” players in the company’s reorganization process and would be likely candidates for recruitment by other apparel companies.
As reported, Babcock, along with 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 the Leslie Fay Dress and Sportswear group, could receive incentive bonuses up to 100 percent of their salaries, based on achieving certain operating goals.
The plan also involves giving the four executives two-year contracts with a possible one-year extension.
Ward heads a dress division that will either break even or show a slight profit this year after losing $40 million last year, Babcock noted in his testimony.
“And we can’t even give the guy the comfort of a three-year contract?” Babcock said.
As reported, Leslie Fay attorney Alan Miller told Brozman on Wednesday that Ward had stated he would leave the firm if he did not receive the new compensation package.
Babcock, in continuing his testimony to strengthen Leslie Fay’s motion for the compensation plan, called Dubel “a very marketable commodity” who would be “very attractive” to competing companies.
While praising his entire management team, Babcock was especially emphatic in defending the plan for Laura Pomerantz, who is the wife of Leslie Fay chairman and chief executive officer John J. Pomerantz.
Laura Pomerantz was the subject of much discussion during Wednesday’s hearing as Brozman and Marc Richards, the attorney for the ILGWU, both questioned why she needed a contract after working without one for 17 years.
The ILGWU has been striking Leslie Fay since June 1.
“It’s absolutely wrong to single out Laura Pomerantz just because she’s married to John Pomerantz,” Babcock said. “She’s a good executive, hardworking, bright and has tremendous contacts. She should be measured on her own merits.”
Babcock added that if Pomerantz did pick up and leave, the person who would replace her would earn “no less” than the $500,000 salary she was seeking along with a three-year contract.
Babcock said that like the other executives, he would also have to consider his options if the compensation plan was not approved.
“I’ve got to look out for myself and my family,” said Babcock.
Richards, the union’s attorney, whose strong opposition to the plan forced the hearing into a second day of testimony, continued the tough questioning Thursday.
After the hearing, attorney Miller admitted that he would not have called Babcock to testify if Brozman “hadn’t been troubled” by some of the testimony she heard Wednesday.
“We would have preferred that he not take the stand,” said Miller. “He needs to be concerned with running the business.”