Harbinger Capital-backed LightSquared is a wireless venture that seeks to create “convenient connectivity for all.” Unfortunately, as the Wilbur Falcone fans among us know, it’s looking like it’ll be a dark day in hell before that happens, on account of bunch of forces working together to shut this thing down at every turn, including but not limited to the yachting community that claims GSP interference caused by LS will result in boats getting lost at sea; the National Oceanic Atmospheric Administration, which has said LightSquared “may degrade precision services that track hurricanes, guide farmers and help build flood defenses”; and the FAA, which recently put out a study estimating LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” Also not helping is the fact that LightSquared filed for bankruptcy in May, the company is blowing through cash faster than Wilbur’s Studio 54 days, and senior executives won’t stop quitting. While some people might take stock of the situation and decide, at this point, to throw in the towel, Wilbur Falcone’s benefactor is not some people. He’s making this thing work if it’s the last thing he does. So, what now? Obviously a couple of miracle workers are going to be needed and the thing about miracle workers is that they don’t come cheap. Gotta spend money to make money.
Troubled wireless-satellite company LightSquared wants permission to dole out up to nearly $6 million in cash bonuses to four of its top employees, including its interim chief executive. Recent months have seen LightSquared burn through money–it has spent $134.3 million since filing for bankruptcy in May, according to its most recent monthly operating report, and executives alike. In court papers filed Wednesday, LightSquared said four senior executives have left the company in the past six months, including its former chairman of the board and CEO. The company wants to make sure four “irreplaceable employees” stick with the company as it attempts to claw its way out of bankruptcy protection and help to make the reorganization as fast and cheap as possible. LightSquared’s bonus proposal paves the way for a “total possible cash payout of approximately $5.985 million” over two years, according to a filing with the U.S. Bankruptcy Court in Manhattan. Four employees–interim CEO, president and chairman of the board Douglas Smith; Chief Financial Officer Marc R. Montagner; general counsel Curtis Lu; and its executive vice president, regulatory affairs & public policy Jeffrey Carlisle–would be eligible for incentives consisting of cash and restricted stock units paid in shares of the company’s current common stock.
If the executives satisfy cash preservation goals, make progress in LightSquared’s efforts to resolve certain regulatory issues and emerge from bankruptcy by the end of 2013, they’ll receive vesting of all issued stock and “aggregate incentive payments of cash up to 285% of each such key employee’s annual salary,” LightSquared said. Hitting less aggressive goals, like exiting bankruptcy by the end of June 2014, would come with smaller payouts, like a cash bonus equal to 100% of the executives’ annual salary, in the case of the mid-2014 bankruptcy exit. Mr. Smith currently makes $700,000 annually; Mr. Montagner and Mr. Lu $500,000 each; and Mr. Carlisle $400,000. LightSquared said each of the employees “provides critical services, drives performance, and impacts LightSquared’s ability to enhance value in the Chapter 11 cases.” The group has also had to take on extra work recently, as more and more employees have left LightSquared both voluntarily and involuntarily. The company said its total employee headcount has dropped by 60% in the last six months. The bonus plan aims to motivate the company’s leaders to manage its businesses and working capital effectively and maximize the value of the estate for the benefit of all stakeholders, LightSquared said.
LightSquared Seeks to Pay Key Executives up to $6M in Bonuses [DowJones]