CEO takes company from $40 a share to bankruptcy, now wants $25 MILLION severance pay!!greenspun.com : LUSENET : Unk's Troll-free Private Saloon : One Thread
Former Warnaco CEO Linda Wachner seeking dlrs 25.1 million in severance
Thu Aug 8, 7:18 PM ET
By ANNE D'INNOCENZIO, AP Business Writer
NEW YORK - Linda Wachner, the former chief executive of bankrupt apparel giant Warnaco Group Inc., is demanding dlrs 25.1 million in severance from her former employer. And the feisty executive, once highly revered on Wall Street, wants her claim to be granted ahead of those of other unsecured creditors.
In a pleading that is making its way through the U.S. Bankruptcy Court for the Southern District of New York, Wachner's lawyers said she earned the amount, and wants the claim to be treated as an administrative expense, which is entitled to top priority under bankruptcy law.
The amount was calculated according to the former CEO's employment contract that allowed for a severance payment based on multiplying Wachner's highest base salary and recent bonuses. It also includes the value of certain accrued benefits and unreimbursed expenses, according to court papers.
Wachner's attorney Kenneth H. Eckstein of the law firm Kramer Levin Naftalis & Frankel, could not be reached for comment.
When Wachner was fired in November 2001, five months after Warnaco filed for bankruptcy protection, the board decided not to pay her severance. Wachner filed a "Proof of Claim" in January 2002, and in the most recent documents, filed with the court on Aug. 2, Wachner's lawyers claim that she brought valuable contributions to the company during both the "pre-petition and post petition" period. Further, because Wachner was fired after the company filed for Chapter 11, she is entitled to that severance package.
The court papers also said that Wachner "put her money where her mouth was by remaining heavily invested in Warnaco stock throughout the last two difficult years. As a result, Wachner has seen a substantial portion of her net worth wiped out."
Doug Morris, a spokesman for Warnaco, declined to comment. In court papers, Warnaco has argued that Wachner's claim has no merit, and has teamed up with its creditors and bankers to fight the claim.
Wachner's fight in court represents a big effort to salvage her tarnished image. According to court papers, Wachner's lawyers said she "has suffered significant professional and reputational injury" as a result of being fired.
Wachner transformed a once sleep bra company into a dlrs 2.25 billion apparel machine, whose products range from Calvin Klein jeans to Olga bras and Speedo swimsuits. But since mid-1998, the company's business began to unravel, hurt by a reduction in demand for its products and fast-eroding market share.
A high profile dispute with Calvin Klein, settled in January, also hurt its core licensed Calvin Klein jeans and intimate apparel businesses. Analysts have blamed Warnaco's woes in part to what they believe was a combination of Wachner's ego and financial self-interest.
The company listed dlrs 2.37 billion in assets against dlrs 3.08 billion in liabilities in its bankruptcy filing and is now fighting for survival.
-- bwaahahaha!! (dream on @ pig. bitch), August 09, 2002
Wow, is she in for a surprise. Since the stockholders lost all their money while she was in charge, I'm going to liquidate all of her personal assets and divide it up among the shareholders.
-- Judge Wapner (firstname.lastname@example.org), August 09, 2002.