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Key Compensation Issues in Chapter 11: KEIPs, KERPs, and more

Katherine Vera Coverdale
Katherine Vera Coverdale
Kirkland & Ellis LLP

Kate Vera is a partner in the Firm’s Executive Compensation Group.

Vance Yudell
Vance Yudell
Alvarez & Marsal Holdings, LLC

Vance Yudell is a Senior Director with Alvarez & Marsal’s Executive Compensation and Benefits Practice.

On-Demand: February 21, 2023
Key Compensation Issues in Chapter 11: KEIPs, KERPs, and more

$195.00 1.5 hour CLE

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Program Summary

This presentation will cover key employee incentive plans (KEIPs), key employee retention plans (KERPs), and other executive and employee compensation issues specific to Chapter 11 bankruptcy, including before filing, during the pendency of the case and upon/after emergence. Pre-filing executive retention awards have been the norm as of late, but such payments may be subject to clawback under Bankruptcy Code Section 548, so proper implementation of such awards (including socialization with the right creditor constituencies) is crucial. KEIPs and KERPs remain key components of post-filing compensation.

When seeking approval for KEIPs and KERPs, counsel must understand the applicable standards and burdens of proof under Bankruptcy Code Sections 503(c)(1) and (c)(3), as well as whether testimony and other evidence are sufficient to meet its burden. If proceeding under Section 503(c)(3), the proponent must show how the KEIP incentivizes participation and is not a hidden retention program; otherwise, the KEIP may be rejected by the bankruptcy court. In terms of post-emergence compensation, equity-based programs (commonly referred to as MIPs) continue to be the primary incentive for key executives and employees but are becoming more of a challenge to negotiate on the front-end, with much discretion left to the new board.

Key topics to be discussed:

  • Applicable bankruptcy law for compensation plans
  • Compensation issues in chapter 11
  • The Government Accountability Office bankruptcy report
  • Current compensation design trends and compensation alternatives companies should consider

Date: February 21, 2023

Closed-captioning available

Speakers

Katherine Vera Coverdale_Kirkland & Ellis LLP_myLawCLEKatherine Vera Coverdale | Kirkland & Ellis LLP

Kate Vera is a partner in the Firm’s Executive Compensation Group.

Admissions & Qualifications

  • New York
  • Massachusetts
  • Pennsylvania (inactive)

Education

  • New York University School of LawJ.D.2010
  • Visiting Student at University of Pennsylvania School of Law, 2009–2010
  • Senior Problem Writer, Casebook Editor — Moot Court
  • New York University School of Law LL.M., Taxation201
  • Stanford University B.A., English with Distinction2006

Other Distinctions

  • Amsterdam Teaching Assistant, Lawyering Program (Legal Research and Writing)
  • Research Assistant for Vice Dean Barry Friedman

 

Vance Yudell_Alvarez & Marsal Holdings, LLC_myLaeCLEVance Yudell | Alvarez & Marsal Holdings, LLC

Vance Yudell is a Senior Director with Alvarez & Marsal’s Executive Compensation and Benefits Practice. Vance focuses on the design and implementation of executive compensation programs at large and mid-sized companies and helps companies tackle how to effectively and efficiently pay and incentivize their employees. Mr. Yudell assists with the development of compensation strategies, benchmarking compensation, annual incentive, and long-term compensation programs that align with a company’s business strategies, all while considering the tax and accounting ramifications.

Mr. Yudell also assists restructuring clients with designing Key Employee Incentive Programs (“KEIPs”), Key Employee Retention Programs (“KERPs”), and Emergence Grants. Prior to joining A&M, Mr. Yudell was a consultant at Mercer, where he focused on total rewards and executive compensation. Mr. Yudell received a bachelor’s degree in Finance from the Cox School of Business and bachelor’s degree in Economics from the Dedmon School of Humanities and Sciences at Southern Methodist University. Mr. Yudell is a Certified Executive Compensation Professional (CECP) through the WorldatWork organization and a member of the Turnaround Management Association (TMA).

Agenda

I. Applicable bankruptcy law for compensation plans | 3:00pm – 3:20pm

II. Compensation issues in chapter 11 | 3:20pm – 3:40pm

III. The Government Accountability Office bankruptcy report | 3:40pm – 4:00pm

Break | 4:00pm – 4:10pm

IV. Current compensation design trends and compensation alternatives companies should consider | 4:10pm – 4:40pm

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