Company's Bankrupt, But Midway Execs Get Greedy (Updated, Now with Less Greed)

March 31, 2009 -

Bailed-out insurer A.I.G. isn't the only in-the-toilet company doling out questionable bonuses to the very execs who ran it into the ground.

For example, there's Midway.

Ben Fritz, who pens Variety's The Cut Scene blog, reports that the financially-troubled game publisher tried to persuade the U.S. Bankruptcy Court to permit it to:

  • pay "incentive" bonuses for an event which already happened (the sale of Wheelman to Ubisoft)
  • pay $1.3M in bonuses for either selling the Mortal Kombat franchise or developing a plan to reorganize the company
  • pay $2M in bonuses for closing the Mortal Kombat deal or getting the reorganization plan approved by the Court

However, the government's Bankruptcy Trustee objected, noting that:

  • it's hard to pay an incentive for something that happened in the past. The Trustee called this "disingenuous"
  • what else do Midway execs have to do except either sell MK or reorganize the company? That's kind of their job at this point
  • the size of the proposed bonuses are "outrageous," in the words of the trustee:

The Debtors seek authority to pay bonuses to a selected group of officers and managers which are four hundred percent greater than bonuses paid to the same group in 2008 when the Debtors were not before the Bankruptcy Court.

 

Given the current state of the general economy, coupled with historical data related to incentive bonuses paid by these Debtors, the Motion constitutes an outrageous request and is not justified by the facts and circumstances of the case.

DOCUMENT DUMP: Grab a copy of the Trustee's objection here.

UPDATE: The Cut Scene has posted an update indicating that Midway has yielded to the Trustee's objections. Its new bonus plan:

  • eliminates the Wheelman bonus
  • the Mortal Kombat bonus now only applies if Midway sells all of its assets
  • A bonus still kicks in a reorg plan is approved by the Court

Comments

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

I'm curious to see where Mortal Kombat ends up. Maybe a Japanese company will buy.

Re: Company's Bankrupt, But Midway Execs Get Greedy (Updated,

If/when a company goes under the workers should be paid frist the board members and exces last, becuse guess whos more likely to be blamed for the mess.....

 


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Re: Company's Bankrupt, But Midway Execs Get Greedy ...

Though I didn't like Midway as much as I used to, Chicago could use more game developer companies.

It's not like game programmers are a natural resource that can only be found in certain climates :P

GameSnooper

Re: Company's Bankrupt, But Midway Execs Get Greedy (Updated,

Thank you US businesspeople for continuing to set the world's bar in scummery.  I wonder if any of the Midway employees who you know, actually MADE the games they're trying to divest of will see any of that money or if it's just a reward for the people who get them out of this mess...after causing it in the first place.  Where I live, people who run companies into the ground like this end up unemployed and often sued.  In the US, they're rewarded!

Parallax Abstraction
Ottawa, Ontario, Canada
blog.digital-lifeline.ca

Parallax Abstraction
Ottawa, Ontario, Canada

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

I doubt that US corporations are the only ones where the board of directors give themselves huge bonuses. It may be the most prevalent there though.

As for the actual employees of the company, ofcourse they don't get bonuses. They'll be told that the company is in financial trouble, so they can't afford them right now.
(all the while increasing the boards bonuses ofcourse)

These bonuses are just extra pay for the executives, and their subordinates won't see a single penny of it. But that's the way of high-end capitalism that the US seems to love so much.

 

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

"I doubt that US corporations are the only ones where the board of directors give themselves huge bonuses. It may be the most prevalent there though."

Correct, same issues here, government bitching and ranting about it, people saying it should be given back, company defending itself with "uhm, these guys did not contribute to the crisis people, those in this country actually helped this country's part of the company to stay in the green", etc, etc.

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

Less greed is still greed in my eyes.

I thought AIG's bonuses were retention and not performance issues, these aren't retention bonuses as noted.

I will admit I'm not 100% certain, but I do recall the talks about our treasury wanting more power to control AIG a bit.

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

I was just thinking there may be less greed but there certainly has to be more envy.

 

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

I can't help but see the phrase of "more envy" as something wrong. Isn't the state of envy just a simple on/off switch and not something that can be measured? @__@


Re: Company's Bankrupt, But Midway Execs Get Greedy ...

Double the posting, double the fun.

Re: Company's Bankrupt, But Midway Execs Get Greedy ...

I was trying to be clever. =\ FINE I'll just find one of the other seven deadly sins to rip on. *_*

Re: Company's Bankrupt, But Midway Execs Get Greedy

Re: Company's Bankrupt, But Midway Execs Get Greedy

Never underestimate the power to human stupidity or greed.   Rather glad to see it was slapped down.  Curious where they thought the money was going to come from to pay said bonuses in the first place. 

Re: Company's Bankrupt, But Midway Execs Get Greedy

These bonuses are just bringing to light a practice that has been standard operating procedure for decades.  Executives are the first ones to pat themselves on the back and throw money at each other, then turn around and tell the employees they have to accept 0% raises, no bonus, reduce headcount, and cut superfluous spending such as travel and hardware.  But executive bonuses are not considered superfluous.

Re: Company's Bankrupt, But Midway Execs Get Greedy

Hmm, this calls for a Money Wad Fight *throws*

 

It gets rather silly when people who were in the company when shit hit in the fan are trying to get more money for fixing a problem that should have been seen coming towards them. I mean, did midway just experience critical existance failure after one to many lefts or was the decline some how so gradual that those who could have seen chose not to see because their money comes first. Or mabey it was paralysis that was caused by their money lined suits? How would those feel against the skin do you think?

Re: Company's Bankrupt, But Midway Execs Get Greedy

I think that's a bit misleading though. Unlike AIG, Midway's executives are paying their executives (yes I know) for actions that benifits the company as a whole. So they lay out goals and if they can achive those goals, then they get paid themselves. It's still pretty sleezy, but not as sleezy as AIG, and it helps keep the company afloat because if these weren't in place, the board of directors would just ditch the company and leave it to die.

Re: Company's Bankrupt, But Midway Execs Get Greedy

The question is, would the fact that they can keep their job and their regular yearly salary be reward enough for reorganizing the company out of bankruptcy?

E. Zachary Knight
Oklahoma City Chapter of the ECA
http://www.theeca.com/chapters_oklahoma

Re: Company's Bankrupt, But Midway Execs Get Greedy

I don't know what their income is but I have to imagine as an exectuive of a (dysfunctional) yet big company like midway, that you would have enough money to weather the recession storm to come. So i imagine that they are only here on the interest of holding a share in midway and trying to make it work. If they weren't doing this, I bet they would just be posting for temporary retirement and comming back into the buisness world when it get's good agian.

Re: Company's Bankrupt, But Midway Execs Get Greedy

You would think, huh?  But as MC Hammer showed us, it doesn't matter how much money you have, some people are actually stupid enough to find ways to squander it all.

"There is no sin except stupidity." - Oscar Wilde

"De minimus non curat lex"
 
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