A San Jose technology company whose CEO received $2.3 million in compensation last year is accepting a $10 million federal small-business coronavirus loan, saying it would keep the firm from cutting jobs.
The Small Business Administration’s Paycheck Protection Program has seen a litany of controversies, with huge restaurant chains and other companies including the Los Angeles Lakers basketball team receiving approvals for large loans and in several cases agreeing to give them up after public outrage. The first round of funding for the program, $349 billion, ran out in less than two weeks. Congress has allocated $310 billion for a second round, and applications are under way. Loans become grants if companies keep employees on the payroll.
Quantum Corporation, a San Jose data-storage company valued at $157 million in the stock market, was granted a $10 million loan in the first round, federal government data show. It said in a regulatory filing this month that it would keep the cash.
Last fiscal year, Quantum CEO James Lerner received total compensation of $2.3 million including a $338,000 base salary, while chief financial officer J. Michael Dodson received $1.1 million including a $318,000 salary, according to a Securities and Exchange Commission filing. Also last year, the company’s previous CEO received $4.1 million in compensation and its previous chief financial officer received $2.1 million, the filing said. Quantum suffered a $43 million loss last year, the filing said.
Quantum did not respond immediately to a request for comment. Lerner, in an April 6 press release, said the firm was navigating a “rapidly changing economic landscape” and was well-equipped to execute its long-term strategic plan. “Quantum equipment is relied on in disaster and crisis situations, and our solutions are core to many of our customers’ business continuity,” Lerner said. “As a result, we remain confident we have a business model that can weather the delays and disruption of a challenging pandemic.”
Quantum told the Washington Post in a statement that its workforce of 550 was smaller than the maximum 1,250 for Paycheck Protection Program loans set by the Small Business Administration for companies in its class.
“The PPP loan is saving American jobs at Quantum — without it we would most certainly be forced to reduce head count,” the statement said. “We owe it to our employees — who’ve stuck with us through a long and difficult turnaround — to do everything we can to save their jobs during this crisis.”
The Lakers, in receiving a $4.6 million loan, provoked U.S. Treasury Secretary Steven Mnuchin, who on Tuesday told CNBC, “I think that’s outrageous and I’m glad they returned it or they would have had liability.” Mnuchin said the federal government would audit any company accepting a loan of more than $2 million.
