Six Flags CEO may get $3 million restructuring bonus

Posted Wednesday, April 15, 2009 8:09 PM | Contributed by Lord Gonchar

Six Flags Inc., the U.S. theme-park owner facing possible bankruptcy, set a $3 million “success bonus” for Chief Executive Officer Mark Shapiro, to be awarded if the company restructures its debt out of court or goes through Chapter 11 reorganization. The bonus is part of an employment agreement with Shapiro extended through April 1, 2013, Six Flags said in a regulatory filing yesterday. Five other managers also had contracts extended with such bonuses. The accords keep the base salaries at current levels.

Read more from Bloomberg.

Wednesday, April 15, 2009 8:22 PM

I'm sure there are a great many people who will jump on this and rant about how wrong it is, but I totally disagree. I think this kind of bonus is completely appropriate. Investor buys up a bunch of stock for a hosed company, puts his management team in place to fix it, and has to give them incentive to keep at it.

For better or worse, I think Shapiro and his team have been doing mostly right things, and I think one line of thinking may have been all along that bankruptcy was the only out in the long term. But you don't punish the people who were trying, and in many ways succeeding, to right the ship.

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Wednesday, April 15, 2009 8:31 PM

For a company that's been clearly turning things around profitability-wise, bonuses are appropriate. I would be at the head of the line ranting against the $3M if Shapiro had been coontinuing or exacerbating the decline. He has headed a turnaround of epic proportions, and frankly (with a new contract in place) am kind of surprised it was that small. SF got a good deal...although it does seem like foreshadowing that the bonus comes into effect "if the company restructures its debt out of court or goes through Chapter 11".

Another way to look at it - where would SF be if Burke and Co. were still in charge? You can guarantee Moosh wouldn't be going to SFMM this year, that's for sure. ;)

Last edited by rollergator, Wednesday, April 15, 2009 8:33 PM
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Wednesday, April 15, 2009 9:03 PM

I feel it's appropriate also. At least Shapiro has made this turnaround a success. He is young, aggressive, and seems to care about the company. SF doesn't want to lose someone like him at this time.

If anyone wants to rant, keep it aimed at the head honchos running companies like AIG where they have done nothing right.

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Wednesday, April 15, 2009 11:09 PM

I see no problem with it either and will spare the long-winded rant because the posts above mine covered it all pretty well.

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Thursday, April 16, 2009 7:11 AM

O.K., I can certainly understand where you guy's are coming from. Before I start, let me just say that my daughter and I are avid Six Flags fan's, and season pass holders. I mean, where else can you have that much fun, any day of the week for 50 bucks? The value is awesome. While Mr. Shapiro made a commitment to clean up the park's and make them more family friendly, and has done an awesome job of that, the balance sheet has all but been ignored. As a CEO, earning in excess of 4 million dollars a year, you just can't let this happen. Yes, this balance sheet was inherited, meaning that everyone, including Mr. Shapiro knew going in, 3+ years ago that the co. was 2.1 billion dollars in debt. And like all debt's, would have to be paid by certain dates. Well, that time has come and the $ is not there to pay it. You see, I look at it this way, if I had a balloon note due on my home 3 years from now, I know exactly what I have to put away to make that payment. If it means that home improvements have to be put off, I can't buy that new car, I don't get to eat out as much as I would like....Whatever it takes to make the payment so I don't loose my home. As a CEO, sure the $ is much larger, but it is the same principle. Keep the parks clean and family friendly, cut spending, lower the debt. Those are the kind of thing's that would earn my CEO a nice bonus.

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Thursday, April 16, 2009 8:10 AM

I agree that this is not a bad move by the company
as long as the company still is a company and not just a trademarked name.I think there is a good chance the company maybe 4 parks they can't sell.The 3 management deals in the US and Dubai .So even if he leads into bankruptcy the deal should be he leads them out of bankruptcy.I think they will be allowed to reorganize in bankruptcy but how long will they be allowed to stay under it without having to sell off assets. This provision will have to authorized by the bankruptcy judge at the time it is paid. unless they pull a rabbit out of their hat.

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Thursday, April 16, 2009 9:17 AM

I don't know, when was the last bonus Steve Jobs got?

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Thursday, April 16, 2009 10:38 AM

I don't see a problem with this because it seems the company is showing signs of turning around. Now, that doesn't mean Shapiro has to accept the bonus, or the entire bonus. If the company is about to default on a bunch of loan payments, does it look right that the CEO is getting a huge bonus? Most people are going to say it appears wrong, and considering what most people know (or don't know), I couldn't blame them.

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Thursday, April 16, 2009 10:50 AM

He only gets the bonus when Six Flags either pays the debt or after they work their way out of bankruptcy. He is not getting the bonus now or even in a year from now.

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Thursday, April 16, 2009 3:03 PM

wild ride said:
While Mr. Shapiro made a commitmentto clean up the park's and make them more family friendly, and has donean awesome job of that, the balance sheet has all but been ignored. Asa CEO, earning in excess of 4 million dollars a year, you just can'tlet this happen.

How can you make that claim when thecompany had its first positive cash flow ever? Not only that, but isn'trighting the company's product and reputation a part of making moremoney?

eightdotthree said:
I don't know, when was the last bonus Steve Jobs got?

Totally inappropriate comparison. One is a billionaire several times over and one is far more vulnerable to the economy he's operating in.

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Thursday, April 16, 2009 3:21 PM

I can make that claim simply by looking at the numbers..... Pre Shapiro, stock trading at 12.00 plus per share, today, under Shapiro for 3 years .19. a 98% loss. Since the 1960's never once heard the word's bankruptcy and six flags in the same sentence. Go back and read what I said. No, the balance sheet is not Shapiro's doing, but as CEO it is his job to fix it, plain and simple. He knew it going in, and has not fixed it. I mean, that is why he makes the big bucks right?

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Thursday, April 16, 2009 3:30 PM

I'd argue that he has fixed it. Bankrupcy was inevitable and would almost certainly be worse if things were left to progress the way they were before Red Zone took over. We'll never know for sure, but maybe the last three years of success are the difference between Chapter 11 and Chapter 7.

Shapiro's leadership very well could have saved the company. Six Flags seems to think so. I kinda do too.

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Thursday, April 16, 2009 3:40 PM

O.K. Im buying it. Shapiro is a God.

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Thursday, April 16, 2009 3:41 PM

^^You were on the bandwagon from the beginning. I was pessimistic, but tried to remain open-minded. Shapiro, frankly, won me over. While there have been a couple mis-steps (charging twice to park!), on the whole the parks appeal to wider demographics, they're cleaner, friendlier, and more efficient in operations. Characters are freakin' ALL over the parks, and they're nicer places to be... signed, a convert to the Church of St. Mark.

edit: wild ride jumped in betwixt our posts.

Last edited by rollergator, Thursday, April 16, 2009 3:42 PM
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Thursday, April 16, 2009 4:10 PM

wild ride said:
You see, I look at it this way, if I had a balloon note due on my home 3 years from now, I know exactly what I have to put away to make that payment. If it means that home improvements have to be put off, I can't buy that new car, I don't get to eat out as much as I would like....Whatever it takes to make the payment so I don't loose my home. As a CEO, sure the $ is much larger, but it is the same principle.

I understand the way you are looking at this, but I don't think it is the same principle at all. The difference is that you are not running a business when it comes to running your household.

Six Flags needs to keep an eye on that debt, sure, but it also has to continue to put the business in a position for generating revenue over time. Otherwise, the bankruptcy might as well be Chapter 7 and everyone moves on.

That's what makes this bonus arrangement make sense to me for this situation. They are trying to keep Six Flags afloat and in business and they need the right people to do it. There are performance expectations tied to the bonus agreement; it's not just a promise should these folks stay on in their positions for X amount of time. And Six Flags isn't calling on anyone from the outside to bail them out. They are working with what they have.

The article also suggests that should they have to go to bankruptcy court, then the bonus agreements may become void and so long as everyone agrees to those terms going in, then it makes sense to me.

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Thursday, April 16, 2009 4:41 PM

Shapiro is doing what a CEO should be doing: Keeping the company alive. Nothing wrong with being paid to do your job.

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Thursday, April 16, 2009 5:01 PM

How much money does the average SF employee make? How much was their bonus?

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Thursday, April 16, 2009 5:28 PM

^ Are you seriously comparing a Chief Executive Officer position to individuals that hand out churro and soft drinks or push some buttons to make an amusement park ride work?

I mean, seriously. Really?

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Thursday, April 16, 2009 5:46 PM

LostKause said:
How many cell phone calls does the average SF employee make? How much was their bonus?

ftfy

Their bonuses will be that they will have jobs to go to. If they don't like those terms, they can apply at AIG, GM, Citibank, etc.

But really, reward is and should be a direct function of risk, responsibility and performance. As those three increase, so should the reward. As this is a performance based bonus, I'm OK with it.

Last edited by RatherGoodBear, Thursday, April 16, 2009 5:47 PM
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