Purdue Pharma receives court approval of 2022 employee bonus plans

By Sarah Lizee

Olympia, Wash., May 20 – Purdue Pharma, LP secured court approval of a key employee incentive plan and a key employee retention plan for 2022, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

The original plans had been modified following consultation with the official committee of unsecured creditors, an informal committee of governmental and other contingent litigation claimants, and the multi-state governmental entities group. Following those modifications, the plans stand unopposed, Purdue said in court documents.

The plans were modified to delay the proposed timing of some payment and to revise some portions of the proposed 2022 performance metrics. The exact adjustments to the performance metrics were redacted from court documents.

As previously reported, Purdue said the KEIP total award for 2022 is $5.37 million, smaller than $7.1 million in 2021. However, according to Friday’s order, the court will mull over the proposed consideration paid to the company’s chief executive officer under the plan at a hearing on June 15.

Like its predecessor programs, the 2022 KEIP includes an annual, incentive-based award payable in 2022 and 2023 and an incentive-based, long-term grant payable in 2023 and subject to clawback through March 2025.

The KEIP applies to two people, the president and CEO, and the debtors’ executive vice president, general counsel and secretary. Previously, the KEIP covered five people.

For the KERP, again the aggregate amount is lower, at $28,474,297 against $29,231,575 in 2021. The average amount per participant is slightly higher at $153,542 from $151,465 the previous year.

The KERP includes an annual retention award payable in 2022 and 2023, a long-term retention grant payable in 2023 and subject to clawback through March 2025 and additional targeted retention payments for certain employees.

For the KERP, 483 employees will participate – lower than the 506 employees in 2021. Of the 483, 18 will be vice president or higher and 465 will be middle management. The annual award will be paid half on Oct. 1 and half on March 15, 2023, subject to clawback if the participant resigns or is terminated for any reason with cause before March 15, 2023. There are also the additional targeted retention rewards.

Purdue Pharma is a Stamford, Conn.-based drug manufacturer. It filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Sept. 15, 2019 under case number 19-23649.

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