• by David Goetzl  @dgoetzl, July 15, 2010

Top executives at Young Broadcasting have dropped claims looking for new ownership to assume employment contracts they signed in 2007. That clears the way for them to continue -- likely under less lucrative deals.

CEO Vincent Young and CFO James Morgan argued in court that the senior lenders, who now control the station group following bankruptcy proceedings, should honor their 3-year-old deals.

But the lenders resisted. And on Thursday, Vincent Young and Morgan dropped their objections.

That probably means the executives have, or expect to, reach new agreements to continue in their respective roles -- the same ones they held before Young Broadcasting filed for bankruptcy in February 2009. The company emerged from the process June 24, having shed $800 million-plus in obligations.

The station group owns 10 stations, including the ABC stations in Nashville and Richmond, Va.; the CBS outlet in South Dakota; and the MyNetworkTV affiliate in San Francisco.

Young Broadcasting President Deborah McDermott will also remain with the new reorganized company. She did not file a claim seeking to be compensated based on a prior agreement.

Senior lenders, including Credit Suisse, Oppenheimer and Eaton Vance, emerged with control of a new Young Broadcasting during proceedings in New York federal bankruptcy court. Vincent Young chairs the new board, although the representatives of the lenders control the other seats.

The 2007 employment agreement that Vincent Young wanted the new owners to assume called for his annual base salary to be $1.4 million, and him to get a possible bonus of more than $2.8 million per year. A provision for payments helping to cover his tax obligations was included --along with provisions that could provide millions of dollars more should he be terminated, while the company was required to cover all costs attached to a leased automobile.

But the new owners favored a deal that emerged during the bankruptcy process that had Vincent Young's base salary at $840,000, while he could receive a $250,000 bonus should provisions be met involving the MyNetworkTV affiliate in San Francisco. There was also a clause for him to get a bonus of between $250,000 and $840,000 if the Chapter 11 reorganization closed by a certain date, but that did not kick in.

CFO Morgan's 2007 deal that he wanted to continue called for a base salary of $671,000, and a bonus that could exceed $1 million annually, along with tax payments and a leased automobile. The lesser deal that the lenders preferred called for a base salary of $302,000 and no bonus.