A. H. Robins Co. agreed to pay $1.1 million in bonuses to 12 executives within weeks before filing for voluntary bankruptcy last Aug. 21.
Two Robins officials disclosed the agreement in sworn statements taken recently by Assistant U.S. Attorney S. David Schiller, who is Judge Robert H. Merhige Jr. rejected a Robins petition to keep the depositions secret. seeking to have Robins held in contempt for making about $7 million in improper payments after filing for bankruptcy. Schiller also wants a trustee named to run the company.
The officials, Norman D. Shellenger, a sales vice president, and Richard McCracken, director of personnel, are among about 40 Robins officers and employes from whom Schiller is taking depositions under a directive from U.S. District Judge Robert R. Merhige Jr., to find out who authorized the improper payments.
Today, after a 25-minute hearing, Merhige rejected a Robins petition to keep the depositions secret until a June 5 hearing he will hold on the contempt and trustee motion.
The Shellenger and McCracken depositions involved the Key Executive Compensation Plan, which allowed payment of deferred compensation only on retirement or termination.
But, Shellenger testified, G. E. R. Stiles, the senior financial officer, told him of a radical change in the KECP in mid-June.
It was also in June, Schiller disclosed in questions to Shellenger and McCracken, that unnamed Robins officials received briefings "regarding the effects of a bankruptcy filing" from King & Spaulding, the Atlanta law firm whose best-known partner is former attorney general Griffin Bell.
As described by Shellenger and McCracken, the change disclosed by Stiles allowed KECP beneficiaries to request and receive their deferred compensation without having to wait for retirement or dismissal.
Shellenger said he did not ask Stiles why the change was made. In a later conversation, however, Shellenger said that Stiles told him without explanation, "If something changes, you might have to pay it back within a year."
McCracken said he didn't recall what Stiles specifically said, other than, "If we wanted to take the deferred compensation, we could have it. That was all."
Shellenger and other recipients did not get the KECP money until Nov. 21, three months after Robins filed for Chapter 11 bankruptcy protection, and have been compelled to refund the payments to the bankrupt estate.