As Sears Closes Hundreds Of Stores, Laying Off Thousands, Bankruptcy Court Approves $25M In Bonuses For Execs
Additionally, Senator Bernie Sanders voiced scorn for the corporate decision that leaves Sears’ regular employees without severance.
Sears, Roebuck and Company, collectively known as Sears, received permission from bankruptcy court Friday to reward $25.3 million worth of bonuses to its upper echelon employees, reports CBS News. The mass retailer convinced the court that it needs the funds to give executives and other high-ranking personnel financial incentive to stay with the company.
Sears had proposed two bonus structures for its company executives. In the first, 18 of them would get around $2.1 million per quarter if Sears reached performance targets. The second one was organized to retain 322 additional execs by giving them cash incentives to stay around during restructuring.
The final structure that was approved this past Friday gives bonuses equaling $8.4 million to 19 executives if the company meets agreed-upon financial targets in the following six months. Also, per CBS News, an attorney for Sears told the Chicago Tribune that those same executives would receive extra cash “if Sears is positioned to reach those targets when sold.”
Additional approved funds will go to 315 of Sears’ senior employees. Funds equaling $16.9 million were allocated to provide retention bonuses for the group. Each of them would be “eligible for the equivalent of 30 percent to 40 percent of their salary, to be divided into quarterly payments during the next year.”
Sears had additionally sought approval to pay its top three execs and other high-ranking employees $1 million each should the company go out of business. Currently, the company is burning through about $125 million per month as they work to restructure both Sears and Kmart department stores. Sears additionally reported a loss of nearly $1.9 billion in the first three quarters of 2018.
Sears stated in court filings in November,
“Under these circumstances, it would be understandable if many key employees are asking themselves whether they should be seeking other opportunities.”
The company added,
“However, the retailer cannot afford this uncertainty — however understandable it may be.”
The 130-year-old merchandiser, which was once the largest and most successful of its kind in the United States, filed Chapter 11 Bankruptcy Protection in October 2018, listing more than $1 billion in assets and $10 billion in debts. There are currently 500 stores still operating, and at the time of the filing, Sears and its Kmart planned to stay in business with aid from $600 million in fresh loans.
The Inquisitr reported back in November that Sears had shuttered over a hundred stores at the time of the writing and, with the closures, thousands of employees were laid off. Some of the displaced spoke out, claiming that they would not be receiving severance packages from Sears.
“It hit me hard. I was already struggling as it was. They say we can’t get our severance because there’s no money, but they’re getting bonuses? It’s like a slap in the face.”
Politician Bernie Sanders even voiced his criticism of the controversial award to Sears on social media, tweeting,
“This is what we mean when we talk about a rigged economy. Sears has $25 million to give bonuses to executives after closing 100 stores, why is the company telling thousands of laid off employees they don’t have the money to pay their severance.”
Eddie Lampert is the former CEO of Sears, and he still functions as the chairman of the once dominant merchandiser. Lampert’s hedge fund, ESL Investments, made an offer recently to buy Sears, which is currently on its way to liquidation.
In some good news for Sears, the company “reported a 4.3 percent increase in sales during the last quarter at Sears and Kmart stores still open at least a year.” The company said last week in a “regulatory filing” that the increase could be attributed to “‘liquidation sales in the stores that were announced for closure.’”
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