Already beleaguered by a Chapter 11 bankruptcy filing stemming from $240 million in debt, Midway Games workers got no rest over the weekend. That's when a February 25 post on the bankruptcy blog NetDockets.com received wide attention for listing three milestones of the Chicago-based publisher's KEIP--key employee incentive plan--to retain 29 workers.
The three milestones, which were authenticated to GameSpot by Midway reps, begin with a $497,500 KEIP bonus for "Entry into a publishing/distribution agreement for Midway's new 'Wheelman' game performance by Midway entitling it to gross proceeds of $6 million under the agreement by March 1, 2009, and actual receipt of those proceeds." The company sealed exactly such a deal last month with Ubisoft, which will distribute and market the Wheelman in North America on March 24 and Europe on March 27.
The next milestone can be reached by one of two ways: Either "submission by Midway of a plan of reorganization to continue as a going concern" or "execution of an asset-purchase agreement for the sale of Midway's Mortal Kombat franchise assets." The third milestone will be similarly achieved by either "confirmation of a plan of reorganization or liquidation" or "closing of a sale of Midway's Mortal Kombat franchise assets." The two milestones will pay out collective bonuses of $1,292,500 and $1,965,000, respectively.
Given the use of the term "bonus" and current anti-executive-payout furor gripping the nation, many gamers saw the move as Midway executives lining their pockets by auctioning off a beloved franchise. Representatives for the company were adamant that this was not the case.
"The 29 employees do include some corporate officers, but there are other employees from all levels and all departments-including finance, IT, legal, marketing--from all over the place." a rep told GameSpot. "These are all people whose workloads have increased since the bankruptcy, and this is to incentivize them."
The rep also confirmed that two separate KEIP plans were submitted to retain Midway's remaining game developers and the Mortal Kombat design team in particular. Both groups were hit by layoffs last December, when Midway culled 25 percent of its workforce.
As for the sale of the Mortal Kombat intellectual property, the Midway rep said that it was one of several scenarios laid out as part of a plan to submit to the company's creditors under the rules of US bankruptcy law.
"That document is not intended to reflect any plan of record for the company," he said. "It's to ask the creditors committee to approve a KEIP plan. ... It's intended to cover all the bases if there's the possibility of an asset sale. Either a [Mortal Kombat] sale or reorganization contingency would be considered success metrics for hitting those milestones."
The Midway rep also stressed that the KEIP plan is "just a first draft" and could go through several revisions before being approved. He also said that the company's board wants "very much" to keep the company together, and "keep what makes Midway at Midway." Finally, he added, "It's management's responsibility to get the maximum value for the assets of the company. ... But it's our goal to keep the company together as a whole rather than sell it off piece by piece, because there's greater value there."