‘They say we can’t get our severance because there’s no money, but they’re getting bonuses?’ said an employee.
While still in the middle of a bankruptcy restructuring, Sears is wanting to pay its executives $19 million in quarterly bonuses. CNN Business reports that the company, which has closed 142 stores, is seeking court approval to pay its top three executives, CDO Leena Munjal, CFO Robert Riecker, and Gregory Ladley, president of the company’s clothing and footwear business, $1 million each if the company goes out of business.
According to court documents, Sears has proposed two bonus structures for executives. The first one would give 18 of the company’s top execs as much as $2.1 million per quarter if Sears reaches its performance targets. The second bonus structure is focused on retaining 322 other executives to stay around during the company’s restructuring. Those employees would get $16.9 million per quarter, an average of about $52,000 per quarter, per executive.
A judge will make the ultimate decision on the bonus proposal, the hearing for which is scheduled for December 20.
Right now, the company is burning through $125 million each month as it works to restructure the company, which includes both Sears and Kmart stores.
While the company may be working to retain executives, it has been laying off employees by the hundreds as it closes stores across the country. Some of those employees claim that the company has decided not to pay out severance packages because of the bankruptcy.
“It hit me hard. I was already struggling as it was,” an employee said. “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.”
The company has not responded to requests for comment on the severance policy, nor has it responded to requests about its bonus plan.
This isn’t the first major company to seek bonuses for executives, even as the company is going through bankruptcy. Toys “R” Us paid $16 million in bonuses to its top 17 executives in December. The move was met with outrage from employees and activists, who felt that executives shouldn’t be receiving bonuses even as severance packages are being cut off.
“It’s outrageous that the bankruptcy court is considering bonuses for Sears’ high paid executives while laid off employees get their severance pay cut off,” said Carrie Gleason, campaign manager for the advocacy group Rise Up Retail. “This is exactly what happened at Toys ‘R’ Us. A handful of executives who couldn’t save the company got millions in bonuses while tens of thousands of dedicated employees were denied their promised severance pay.”
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