The 2020 bonus plans at Gogo will look a bit different than in prior years. As the company continues in its efforts to separate and sell the Commercial Aviation (CA) inflight connectivity business it determined that “designing awards that retain and motivate key talent” was necessary, ranging from 25% to as much as 266% of annual salary for key named executive officers. Two tranches of bonus awards are possible with these awards sitting atop the general employee bonus plan which also is changing for 2020.
Executives could score big
The “Reorganization Bonus” applies to four named executives, Oakleigh Thorne, Barry Rowan, John Wade and Marguerite Elias and “certain other employees” at the company. As a thank you for the “significant work effort involved in legally separating the assets and liabilities of the BA and CA divisions of our Company” the named executives are eligible to receive a bonus of 25-40% of their annual salary. This bonus is expected to be paid in company shares.
Separately, a “CA Bonus” program is available to the same named executives, along with Jonathan Cobin, “contingent upon the consummation of, and in recognition of the significant work effort involved in, a transaction related to our CA business” Selling the CA business will prove particularly lucrative to these executives, with a 25-266% of annual salary range on the potential bonus; the company expects to pay at the mid-point for each covered employee. This one is also expected to be paid in cash, not shares.
The announcement of these large bonuses comes as a stark contrast to the company’s move last month to lay off 143 employees, predominantly in the CA division. At least the organization accounted for the fact that many of the same people are included in both programs, with the CA Bonus taking priority over the reorganization bonus should a transaction not materialize. That is a smaller payout and something of a consolation prize if the CA sale falls through.
In similar scenarios these sorts of bonus announcements are made on the cusp of the triggering transaction. To that extent, it is reasonable to assume that the reorganization work is now complete and that a CA deal is very much in the final stages of negotiation.
Regular bonuses changing, too
In addition to the published bonus changes related to the CA sale, regular employees will see a different bonus structure this year, one focused on a solitary, group-driven objective.
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