Barclay Knapp, chief executive of bankrupt US cable giant NTL, is to be rewarded for leading the group – which operates mainly in the UK – into a crippling $20 billion-plus (€20.58bn; £12.92bn) morass of debt.
This unique achievement is to be acknowledged by NTL’s grateful bankers and bondholders, it was revealed Monday. Not by a Knapp-sacking, as most sane business people would consider appropriate, but a tripling of his pay packet.
Such largesse demonstrates the first law of banking and investment – that there greater profit potential in rescuing a failed company with a durable and inorganic infrastructure than building one from scratch.
Under the terms of his latest employment contract (unearthed from the New York bankruptcy court overseeing NTL’s Chapter 11 filing), Knapp will get a basic annual salary of $700,000 ($277,000 last year). He will also receive a discretionary cash bonus of up to double his salary, and shares worth $700,000 plus an unspecified number of share options. There is also a severance package that guarantees him up to $2.1 million should he ever get lucky enough to be fired.
Nor is the contribution of three other NTL top American executives overlooked. In second place at the banquet of bankruptcy is general counsel Richard Lubasch, due to receive $477,000 annually under the new deal.
Said an NTL spokeswoman: “I am sure that the board and the creditors would not have put together a contract that was not reasonable and fair.”
Data sourced from: Times Online (UK); additional content by WARC staff