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The fattest ever fat cats?
Eat the rich at Rhythms NetConnections
Execs at Rhythms NetConnections in the US awarded themselves $4 million in bonuses just three days before seeking bankruptcy.
In filings made to the Securities and Exchange Commission regarding the Chapter 11 bankruptcy, acting CEO Steve Stringer is to take a salary of $400,000 with a "retention bonus" of $2.73 million, reports the Denver Post. He will also get an annual bonus of 60 per cent of his salary, another $240,000. CFO J.W. Braukman III will get a salary of $300,000, retention bonus of $1.36 million and the 60 per cent, which gives him another $180,000.
The money was agreed in new employment contracts produced just days before the company filed for bankruptcy and will be paid in monthly instalments over 2002, leaving both execs possible contenders for the title of world's fattest fat cats. Lawyers are looking at whether the bonuses can be allowed to go through. The company still has $133 million in cash.
Rhythms NetConnections used to be a market leader in supplying wholesale DSL and was listed on Nasdaq, but has been in trouble for a while. In April this year, its chairman and CEO Catherine Hapka resigned as money dried up and the company brought in an investment bank to sort it out.
It sacked 900 staff this year and will lay off the majority of the remaining 1,000 staff unless someone offers to buy the company by the end of this week.
In contrast to the chief execs huge bonuses, bog-standard staff can expect a month's pay if they've been there less than a year and six weeks' pay if they've been there longer. Middle management gets 11 weeks' pay, irrespective of time spent at the company. Execs gets 50 weeks' pay.
Steve Stringer has left an anodyne bankruptcy update on the company's Web site, with a link to the formal press release. At the end it thanks everyone for their support. Hmmm. ®