The instant filmmaker’s retirees rallied last week to elect an ad-hoc committee after learning that Polaroid’s motion with the US Bankruptcy Court in Delaware sought up to $19 million in bonuses and incentives for about 45 executives. Another $1 million, in part, could be available to employees outside that group.
Polaroid’s lawyers are expected to argue that the money is necessary for retaining executives as the firm works to sell all or part of the company.
However, the week before Polaroid declared bankruptcy, several senior executives quit on fears the government would end up taking over Polaroid’s pension plan and cap annual payouts at $40,704.
Lump Sum Walkouts
Insiders have said that by resigning early, Polaroid executives were able to take their pensions in lump sums, totaling millions of dollars. This came after more than 3,000 employees were laid off as part of Polaroid’s restructuring plans.
Polaroid filed for Chapter 11 bankruptcy protection in October after failing to meet payments on nearly $1 billion of debt. The same month, the company notified its employees that its pension plan was underfunded by about $100 million.
And, days before it’s filing for bankruptcy, Polaroid dropped medical coverage, life insurance, and severance benefits for retirees. The Pension Benefit Guaranty Corp. (PBGC) was ready to step in, Polaroid said in an October 1 letter. However, the company warned retirees that if the PBGC took over the pension plan, it was unlikely lump sum payouts would continue.
For pension plans terminating in 2001, the maximum guaranteed annuity amount is $40,704 per year for a worker who retires at 65. That annual payout would be $18,317 for workers who retire at 55, Polaroid said.
-Nicole Halsey email@example.com