Executive Compensation in Bankruptcy | Practical Law
A Practice Note discussing the issues companies operating in Chapter 11 need to consider when designing and proposing executive compensation programs for their key employees. This Note also addresses the evolution of executive compensation programs following the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (which added Section 503(c) to the Bankruptcy Code), the differences between key employee retention plans (KERPs) and key employee incentive plans (KEIPs), how Section 503(c) applies to KERPs and KEIPs, the Section 503(c) limits on severance payments, and exceptions for payments made in the ordinary course of business.