paidContent.org - AIG Meets Gaming: Bankrupt Midway Slammed For Bonuses
Tuesday, March 31, 2009; 2:07 PM
Mortal Kombat publisher Midway Games is getting the AIG treatment: the Feds overseeing its bankruptcy proceedings (and its pack of peeved creditors) have slammed its plan to pay out just over $3.75 million in bonuses to over two dozen employees. Beaten down by the opposition, a Midway exec told Variety that the company would revise its "key employee incentive plan," and file the new version in court tomorrow.
Three payouts are in question: about $500,000 for selling publishing rights to the Wheelman game (which the execs already received a bonus for?because the sale happened pre-bankruptcy); roughly $1.3 million for either selling the Mortal Kombat franchise, or submitting a reorganization plan to the court, and then nearly $2 million on top of that for closing the Mortal Kombat deal or getting the reorg approved.
The objections: The Wheelman bonus is a no brainer. The execs got bonuses when Midway sold most of the games' rights to Ubisoft already, why should they get paid again? As for the money tied to either the Mortal Kombat sale or the submission of the reorg plan, the U.S. trustee appointed to the case and the unsecured creditors' committee summed it up: "Senior management should not be paid incentive bonus payments ... to perform duties required to be performed by their obligations under the Bankruptcy Code." Selling Mortal Kombat or submitting a suitable reorg plan isn't something "special" these execs should be incentivized for?it's their job.
Midway filed for Chapter 11 bankruptcy last month; the publisher is on the hook to shareholders and creditors like the NBA and Warner Bros. Interactive Entertainment for about $240 million. Entrepreneur Sumner Redstone kicked off the company's downward spiral when he offloaded his majority stake in Midway last December; his fire sale triggered conditions that would allow shareholders and creditors to ask for prompt repayment?which Midway clearly could not deliver then (or now).