No, it was a replacement of bonus compensation with salary. It's illegal under U.S. law to pay retention bonuses in a bankruptcy situation, and most companies respond by trying to turn all bonus compensation into salary.

It's another example of a supposedly consumer-friendly law having the reverse effect. What companies used to want to do (as the consultant recommended here) was pay incentive compensation for turning the company around. But, if the turnaround was accomplished in an acrimonious situation, as would be the case here, interest-holders in the company (such as unions) would later sue and allege that the compensation was a retention bonus. Generally, the executive would agree to take a "haircut" on the amount paid to end the litigation costs. As a result, executives in general will no longer accept such bonus arrangements; the only way that the payment is exempt from the risk of future lawsuit is if it's included in base compensation (i.e., salary).

Paying this is sub-optimal from a corporate viewpoint, because the executive gets the higher pay whether or not the company turns around. But it's all that's left, based on the current legal situation.

Stupid? Of course. But so are many of our so-called "worker protection" laws.