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The bankrupt Philadelphia Energy Solutions oil refiner is seeking a minimum of $2.5 million in bonus payments to the refiner’s top executives as part of a plan to reorganize or sell the company, U.S. bankruptcy court filings show.
This would represent a potential second round of bonuses for PES executives, who were already paid roughly $4.5 million in retention awards after a massive June fire that resulted in the plant’s shutdown. PES laid off hundreds of workers without severance pay or benefits following the blaze.
The latest round of bonuses will be paid if PES confirms a reorganization within 15 months of its July Chapter 11 bankruptcy filing, according to documents filed with the United States Bankruptcy Court for the District of Delaware on Friday.
Alternatively, the $2.5 million could also be paid if PES secures at least $300 million in net proceeds from a sale, insurance proceeds or other payments, including a lawsuit the refiner filed against the federal government over excise taxes, the documents show.
Under the plan, Chief Executive Officer Mark Smith would receive 29% of any incentive bonuses, PES board of directors Chairman Mark Cox gets 25%, Chief Financial Officer Rachel Celiberti 18% and attorney Anthony Lagreca would get 14%. Three other employees would receive smaller amounts.
The executives are needed to oversee the bankruptcy and sale process, seek insurance proceeds and manage idling the plant, among other work, the court filings said, with attorneys noting these duties “go well beyond the demands of their day-to-day jobs.”
The company was not immediately available for comment.
PES entered bankruptcy on July 21 and shut its last crude distillation unit later that month. The refinery has since been put up for sale and has attracted interest from more than a dozen parties, ranging from biofuels producers to real estate developers.
Bonus payments to the executives would increase by 2.5% on every dollar above the $300 million in net proceeds minus expenses. If the proceeds hit $1 billion, bonuses would increase seven-fold.
Smith would get a $725,000 payment under the minimum payment and as much as $5.8 million if the net proceeds hit $1 billion.
The refiner is attempting to secure as much as $1.25 billion in insurance proceeds for damage and business interruption linked to the June fire and explosions.
(Reporting by Laila Kearney in New York; Editing by Matthew Lewis)