Midway revises bonus plan: reduces amount, excludes CEO, kills Mortal Kombat sale
As promised, Midway has responded to the complaints of its creditors and bankruptcy trustee by revising its proposed "key employee incentive plan" so that it spends less and doesn't appear to be rewarding folks for work they've already done or should be doing.
Filed last night, here are the key changes:
-CEO Matt Booty (right) is no longer eligible for a cash bonus. That leaves 28 eligible employees, of whom four are believed to be executives, with the majority of the rest in product development.
-Selling the "Wheelman" publishing rights to Ubisoft is no longer part of the plan. The creditors and trustee complained, with obvious logic, that the sale had already occurred before the plan was finalized and filed. It's tough to argue someone should get a bonus as an incentive to do something that happened in the past.
-Instead of getting a bonus for selling the "Mortal Kombat" franchise, Midway employees now only get a bonus if the publisher sells all of its assets. Of course, "Mortal Kombat" is Midway's most valuable asset by far, but they've got to get a buyer or buyers to take even the junk ("Area 51," anyone?) as part of the package.
The other, more difficult option for getting a bonus -- submitting and receiving court approval for a restructuring plan -- remains. Except now it has to also be approved by new owner Mark Thomas or allow for payment in full of his secured claims, $30 million. No easy task given that Midway had less than $20 million of cash on hand as of February 2.
-The minimum amount Midway employees will get under the plan is less than the $3.755 million proposed in the earlier version. However, there is now a variable portion whereby if the company's assets are sold, employees get more depending on the price. That addresses objections that the bonus isn't tied closely enough to performance.
-Employees still have to be working for Midway on the date a milestone (the first being execution of a sale agreement or filing or a reorg plan; the second being the closing of a sale or court approval of the plan) in order to get a bonus. That partially addresses criticisms about employees leaving, though it doesn't prevent them from jumping ship the day after a milestone and, if they're a valuable enough person (like, say, "Mortal Kombat" creator Ed Boon), suddenly reducing the value of the company.
-Instead of getting a bonus for selling the "Mortal Kombat" franchise, Midway employees now only get a bonus if the publisher sells all of its assets. Of course, "Mortal Kombat" is Midway's most valuable asset by far, but they've got to get a buyer or buyers to take even the junk ("Area 51," anyone?) as part of the package.
The other, more difficult option for getting a bonus -- submitting and receiving court approval for a restructuring plan -- remains. Except now it has to also be approved by new owner Mark Thomas or allow for payment in full of his secured claims, $30 million. No easy task given that Midway had less than $20 million of cash on hand as of February 2.
-The minimum amount Midway employees will get under the plan is less than the $3.755 million proposed in the earlier version. However, there is now a variable portion whereby if the company's assets are sold, employees get more depending on the price. That addresses objections that the bonus isn't tied closely enough to performance.
-Employees still have to be working for Midway on the date a milestone (the first being execution of a sale agreement or filing or a reorg plan; the second being the closing of a sale or court approval of the plan) in order to get a bonus. That partially addresses criticisms about employees leaving, though it doesn't prevent them from jumping ship the day after a milestone and, if they're a valuable enough person (like, say, "Mortal Kombat" creator Ed Boon), suddenly reducing the value of the company.
The proposed revisions, along with other less exciting issues, will be discussed and potentially approved tomorrow at a court hearing in Delaware. Still no word on when, if ever, they''ll get to see the really good stuff, like making Sumner and Shari Redstone's testimony public.
Chris Morris reports on the business and culture of video games and offers analysis of recent events and industry trends.
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Posted by: jordan shoes | November 24, 2009 at 05:03 AM
Midway is such a busted company that has failed time and time again to learn from its mistakes, top execs like Zucker, Crane, Allison, Booty and the old guard made millions from the higher share price sell off years back and has now cleverly "adjusted" its bonus position on the eve of selling everything to one buyer no doubt, anyone who didn't see that coming must be blind.
For a company that'll never make back the $35 million dev costs I've heard we're dropped on Wheelman and the fact that Studios were operating with a blank check policy years back (Surreal & Austin)has now bit them in the ass.Hell, if anything Booty should resign because they have THE worst reputation in videogames right now.
Posted by: Mr Deeds | April 01, 2009 at 01:49 PM