Bankruptcy: Chemtura Seeks Approval of Key Employee Incentive Plans - 15 July 2009

Chemtura Seeks Approval of Key Employee Incentive Plans

On Tuesday, Chemtura Corporation filed a motion with the bankruptcy
court seeking approval of (1) a management incentive plan for the 2009
calendar year and (2) an emergence incentive plan. In addition, the
company sought authority to honor certain obligations under existing
bonus programs up to a total of $120,000. The latter request relates to
an administrative error that occurred prior to Chemtura's March 18th
bankruptcy filing which resulted in two employees not receiving the
bonuses to which they were entitled.

The
motion reports that the proposed new key employee incentive plans are
necessary because of the requirements that have been placed on the
company's employees as a result of the bankruptcy filing, among other
factors. In the months since the bankruptcy filing, Chemtura has lost
26 management employees (including three divisional vice presidents and
two assistant general counsels), all of whom voluntarily resigned to
join other organizations. In crafting the proposed plans, Chemtura was
assisted by several outside advisors, including Pearl Meyer &
Partners, an outside compensation specialist.

• The 2009 Management Incentive Plan (MIP):
  The metrics for bonuses under the MIP are based upon earnings before
  interest, taxes, depreciation and amortization (EBITDA) on a
  consolidated or business unit basis (as well as other working capital
  factors). The plan would cover seven eligible executives, 149 eligible
  managers of separate business units, and 126 managers responsible for
  business operations at a functional level. The motion reports that the
  total targeted payout pool for the 2009 MIP is $11.5 million.


• The Emergence Incentive Plan (EIP):
  The EIP is apparently intended to replace Chemtura's pre-bankruptcy
  equity compensation plan. The motion states that between 20 and 200
  management-level and qualifying new employees would be eligible to
  participate in the EIP, depending on achievement of EBITDA-based goals.
  Equity grants under the EIP would be made upon emergence from chapter
  11 and would include time-vesting requirements. The value of the equity
  pool under the EIP is linked to specific EBITDA levels, with a maximum
  pool value of $16.5 million at an EBITDA level of $300 million. The
  plan also includes a discretionary $750,000 grant pool.