Trustee Files To Keep Cumulus From Awarding Bonus Money

The U.S. Trustee assigned to the Cumulus Media case filed with the U.S. Bankruptcy court an objection to the Company’s motion to continue its incentive compensation program.  At stake are unpaid 2017 and potential 2018 bonuses for 600 managers, programmers, sales execs and corporate team members.

Trustee William Harrington claims Cumulus didn’t disclose specific metrics for the six bonus plans or provide information about past bonus plans. “Without this information it is impossible to determine if the Debtors’ bonus plans represent challenging results and are, indeed, incentive plans,” he writes.

The objection asserts, “The United States Trustee objects to the Bonus Motion on the grounds that the Debtors have failed to meet their evidentiary burden of proof to show that the proposed bonus payments comply with Section 503(c) of the Bankruptcy Code. The Debtors seek authority to implement incentive plans for admitted insiders. The plans, however, not only award bonuses for targets that were obtained pre-petition, but also fail to provide information to allow the Court, creditors and the United States Trustee to determine if the metrics used in the plans represent challenging goals.”

The objection continues, “In addition, the Debtors fail to meet their burden to establish that alleged non-insider plan participants, who include executives and officers, are not in fact insiders. In this regard, the Debtors do not provide specific information regarding the job titles, descriptions and reporting relationships of each person they propose to pay under the plans, and therefore, the Court, United States Trustee and other parties in interest have no facts with which to make a reasoned determination as to whether the characterization of non-insider status to each prospective individual is appropriate.”

The bonus programs cover about 600 of 3,600 full time employee or about 16% of the company’s workforce. The Feb. 8 order authorizes Cumulus to pay 80 market managers, 193 sales management execs at Cumulus and sister network Westwood One, 237 programming management employees and 64 members of the Cumulus corporate staff and Westwood One.

In response to the Trustee's objection, Cumulus Media released the following statement:

"The objection filed last night has absolutely no impact on the authorizations the Court gave the company on February 8th to pay incentive compensation for employees who earned it in 2017, or will earn it in 2018.  We will be making our incentive compensation payments to those employees, beginning with this week's normal payroll cycle. The objection filed is common in these situations and applies only to a small number of senior executives whose compensation will be addressed at an upcoming hearing on March 12th."