Silicon Graphics to give out bonus money even though company performance fell short

The compensation committee for the board of directors at Silicon Graphics has given its OK to the distribution of a $3.44 million “discretionary bonus pool for participating employees, including vice presidents, executive officers and the named executive officers still with” SGI, even though no payments will be made under the company’s fiscal 2008 “Annual Variable Incentive Plan” because the “performance metrics” under it were not met.

The payments were also approved a day before the company arranged for the fifth amendment to an October 2006 loan agreement it made with Morgan Stanley around the time of its re-emergence from bankruptcy. The amendment adds a reporting requirement that forces SGI to “provide a minimum thirteen-week cash forecast on a monthly basis” and increases its interest rate by 2 percent. It also cost the company a $662,500 fee, which was added to its principal amount.

The payments will be made at the discretion of SGI Chief Executive Robert Ewald, who won’t be eligible for any of the money. But don’t cry for him. As we wrote about last week, he got a $150,000 payment awarded to him “in recognition of his accomplishments during fiscal year 2008.” Approval for that payment came a month after the company announced laying off seven percent of its staff. That was on top of his $600,000 salary and a guaranteed bonus payment of $138,462 for his first few months on the job.

 

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  • Juan

    I lost all my shares (1000) of common stock when SGI filed for bankruptcy a couple years back. I took that risk so I didn’t cry about it. There is something fundamentally unfair however, about rewarding a CEO when the company continues to lose money and even more insulting after they laid off workers with families to feed and obligations to meet. This gold old boys ceo club culture is at the root of the problem with american companies. It is absurd to reward bonuses to managers who fail to deliver results. I don’t care how you slice and dice it this is total bullshit!

  • John Ramsey

    The sad thing is the people within the walls of SGI have no idea what the real world is like. It’s earliy similar to a Jones Town, where people walk around in vegetative states and employees who do not “drink the kool aide” are systematically eliminated.

 
 
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