Patrick Springer, Published April 11 2012
Cetero asks bankruptcy judge to OK up to $1.3 million in exec bonuses
The company, which has a major drug-testing research center in Fargo, is asking a bankruptcy judge to approve a “key employee incentive plan” that would reward executives and managers.
Key employees have assumed a bigger workload to run Cetero due to its bankruptcy reorganization, filed in late March, the company said in documents submitted with U.S. Bankruptcy Court in Delaware.
“In particular, the greatest burden has fallen on a core group of employees … that are responsible for making substantially all executive, managerial, and operational decisions vital to the preservation and maintenance of the going concern value of Cetero’s estates,” the company said in its motion.
Cetero, which has corporate headquarters in Cary, N.C., has 1,140 employees in seven cities in the United States and Canada.
A dozen key executives as well as an unspecified number of project managers are listed as candidates for the incentive program. It aims to reward extra efforts as the company works to reorganize, with the aim of being taken over by new owners.
One of those listed is the president of Cetero’s Fargo operations, which includes 544 beds and almost 400 employees who are engaged in early-phase testing of new drugs.
The executives’ names and proposed bonus amounts are redacted from the court file. Cetero’s website lists Alan Kopa as president of its Fargo center.
A Cetero spokeswoman declined to comment when asked about the bonus plan by The Forum on Wednesday. Calls left Wednesday with a lawyer for the bankruptcy trustee and lawyers for the creditor’s committee were not returned.
The total of the proposed bonuses for the listed executives is $1,060,000. Elsewhere in the document, assuming a $50 million bid for the company, the estimated bonuses would total $1.3 million.
If approved, the bonuses would be paid once the company is sold. The bonuses would not be severance payments for insiders, the company said.
Cetero said the bonuses would achieve a “sound business purpose” by providing incentives for the key managers to handle the company’s sale “promptly and efficiently.”
The incentive plan is structured so that bigger cash bonuses are awarded for a higher sale price for the company.
“This structure ensures that the Eligible Employees are motivated to ensure a successful restructuring and maximize value for Cetero’s estates and creditors regardless of how these goals are achieved,” the motion said.
The bonuses would not unfairly discriminate, but would reward key staff members who are “uniquely positioned” to maximize the value in a sale of “all or substantially all” of the company’s assets, the company said in court filings.
The company struggled following a highly publicized investigation involving falsified time sheets by a few chemists at its lab in Houston. Reviews have confirmed lab results.
A spokeswoman has said Cetero should emerge from bankruptcy reorganization as a stronger company and expects to add staff, including at its Fargo location.