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Performance Sports Group KEIP/KERP Approval Sought

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Performance Sports Group filed with the U.S. Bankruptcy Court a motion for entry of an order approving the Debtors’ key employee incentive plan (KEIP) and key employee retention plan (KERP) for certain employees and authorizing payments contemplated thereunder. The motion explains, “Debtors have identified 6 senior executives to receive payments under the KEIP and 60 non-insider employees to receive payments under the KERP (collectively, the ‘Eligible Employees’), all of whom possess institutional knowledge and skills that are essential to the Debtors’ restructuring efforts.”

The motion continues, “If the Sale Proceeds exceed the Stalking Horse Consideration by $5,000,000 (i.e. the cash consideration realized by the estates from the purchase price is $580,000,000 after payment of any applicable bid protections), the KEIP Participants will be entitled to Tier 1 ‘Target’ payouts (i.e. 100% of their target bonuses). If Sale Proceeds exceed the Stalking Horse Consideration by at least $50,000,000 (i.e. the cash consideration realized by the estates from the purchase price reaches $625,000,000), KEIP Participants will be entitled to ‘Tier 2’ compensation of 200% of their target bonuses. If cash consideration realized by the estates from the purchase of the available assets exceeds $625,000,000, the KEIP Participants will be entitled to an aggregate payout which equals 3% of the total consideration above $625,000,000 as additional bonus on top of the Tier 2 ‘Stretch’ bonuses.”

In addition, “If the Tier 1 ‘Target’ level is met, the KEIP will have a total plan cost of $1,776,753, which amounts to an average of $296,125 per KEIP Participant. If the Tier 2 ‘Stretch’ level is met, the KEIP will have a total plan cost of $3,553,505, which amounts to an average of $592,251 per KEIP Participant. Payouts were determined based on a percentage of each KEIP Participant’s target bonus. If the Tier 1 ‘Target’ level is met, no KEIP Participant will receive more than $750,000; if the Tier 2 ‘Stretch’ level is met, no KEIP Participant will receive more than $1,500,000.”

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