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Heritage Home Group – Seeks Approval of KEIP and KERP; Files Related Seal Motion

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August 6, 2018 – Heritage Home Group filed with the Court redacted versions of its Key Employee Incentive Plan (KEIP) and Key Employee Retention Plan (KERP) [Docket No. 77]. The motion notes, “The KEIP provides for potential incentive payments (in each case, a ‘KEIP Payment’) to two (2) senior executives, the Debtors’ Chief Executive Officer (the ‘CEO’) and Chief Operating Officer (the ‘COO’ and together with the CEO, the ‘KEIP Participants’). Payments under the KEIP will be based on the successful sale, or sales, of substantially all of the Debtors’ assets within a range of target price levels….The aggregate amount available under the KERP Program is $1,258,500, which is comprised of $1,008,500 for identified KERP Participants and an additional $250,000 allocated to a discretionary pool for employees who may be added later on an as-needed basis….The KERP Participants have salaries ranging from $41,205 to $290,000, a mean salary of $135,961, a median salary of $127,615.” The Debtors also filed with the Court a motion to file under seal certain information contained in the KEIP and KERP [Docket No. 79]. The seal motion explains, “In addition to the significant privacy concerns for the individual KERP Participants, who are not insiders of the Debtors, the public disclosure of such information could provide the Debtors’ competitors with an ‘unfair advantage’ in efforts to recruit and hire away the Debtors’ essential employees during a critical period, by providing them with such employees’ exact salary levels, and potential bonus compensation….In addition, the KEIP/KERP Motion contains specific sale targets upon which KEIP Payments are based and other sensitive information related to the Debtors’ Sale Process. Given that the Sale Process is on-going; the public disclosure of such Confidential Information could substantially impair the value of the Debtors’ estates by providing potential buyers with an unfair advantage in negotiations.” The Court scheduled an August 27, 2018 hearing with objections due by August 20, 2018 to consider the KEIP, the KERP and the related seal motion.

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