Opinion ID: 789650
Heading Depth: 3
Heading Rank: 2

Heading: The accrued unpaid bonuses for 2001

Text: 72 Bonuses are clearly the type of extraordinary payments encompassed by Section 1103. By definition, a bonus is not an ordinary and usual payment, but rather a consideration or premium paid in addition to what is strictly due and a premium or extra or irregular remuneration. As Senator Lott commented about Section 1103: While an investigation is underway, basically rewards were given to these corporate executives. Any common sense interpretation of a bonus understands that it is a special reward for meeting or surpassing goals. 73 Yuen and Leung's 2001 bonuses are exactly the type of payments that should be frozen: their bonuses are rewards for Gemstar's 2001 reported financial results. The Commission is investigating whether Gemstar's 2001 financial results were fraudulently overstated. Since Yuen and Leung (and others) signed and filed Gemstar's 2001 Form 10-K on April 1, 2002, Gemstar has restated and reversed substantial revenue items contained in the 2001 Form 10-K. The very set of events Section 1103 was designed to prevent is implicated by the bonus payments: while the Commission is attempting to determine whether Gemstar's 2001 financial results were overstated and fraudulent, Yuen and Leung are demanding to be paid for those results. 74 Under their employment agreements, the calculation of Yuen and Leung's bonuses is tied directly to Gemstar's reported financial results. Yuen's merit bonus is calculated using his adjusted base salary and Gemstar's percentage increase in EBITDA (earnings before interest, taxes, depreciation, and amortization). Yuen and Leung each had an identical provision in their employment agreements for an incentive bonus, calculated based on Gemstar's reported financial results.