Beaver Valley Update: FENOC Key Employee Retention Plan (KERP)

Wednesday, November 7, 2018
Soon after the bankruptcy case was filed, FENOC asked the Court to approve a key employee retention plan (KERP) that would pay approximately $100 million to about 1000 salaried employees to encourage them to continue working, despite the bankruptcy and the deactivation notices. The proposal would have covered about 70% of the salaried workforce. FENOC proposed nothing for any union workers.
Acting collectively, the Unions at Perry (UWUA Local 270), Beaver Valley (IBEW Local 29), and Davis Besse (IBEW Locals 245 and 1413) filed an objection with the Court, arguing that the KERP was unfairly discriminatory and should be rejected. The Court was presented with witnesses and legal arguments from the Unions and the Company.  Although the law in these situations heavily favors the Company, the Unions won and the Court denied FENOC’s proposed KERP. The Court told the Company that if it wanted a KERP, it needed to go back to the drawing board and try again.
Following the Court’s rejection of its proposed KERP, the Company and the Unions began to meet and exchange proposals for a revised KERP that would include union workers. While the Unions proposed to cover ALL union workers in a fair and non-discriminatory manner, the Company proposed to provide very limited benefits to only a few job classifications.  At some point, the Company proposed to provide minimal benefits to all union workers but only if the Unions agreed to gut important provisions of our contracts. At the same time, the Company has continued to push its same proposal for salaried workers.  Given the Company’s approach, the Unions and the Company have made no progress toward reaching any agreement. Throughout the process, by the comments and proposals, the Unions have felt that the Company has been insulting and disrespectful to the Unions and our members.
Meanwhile, the Official Committee of Unsecured Creditors has decided to take an active role in coming up with its own proposal for a KERP that, they say, would be less unfair and discriminatory, although not likely to include all workers. The Unions have met with and provided information to the creditors committee’s lawyers and financial advisors, with the hope that they may develop an approach that would be more acceptable than anything that the Company has proposed so far.
The Company has told the Court that it plans to file a revised KERP motion on November 9, 2018.  The Court has scheduled a hearing for November 30 to consider the new motion. We have no idea what they intend to propose – and surely hope that it is not what they have proposed to us so far.
This entire process is unprecedented. Never before in the history of our Unions have we worked together in this way. Through our strength and coordination, we were able to achieve an amazing victory in defeating the Company’s proposed KERP.  Although at this point we cannot predict the outcome, we wanted to provide a brief overview of where we are and how we got here.