Sears is bankrupt. This isn’t headlines news, exactly. Once the king of American retail, the company has been in a tailspin for decades. Now, though, Sears has asked for court approval for a massive payoff destined for the bankrupt company’s executives. Sears wants $19 million to cover the cost of quarterly bonuses.
“Three top executives could get nearly $1 million each if the company goes out of business,” CNN reports. “If Sears remains in business, they could get nearly $500,000 each for hitting the top performance targets.”
The company sees the two potential outcomes differently, but is looking out for their executives either way. If the company manages to stay afloat and reach cash-flow targets, 18 executives will share in $2.1 million.
This would seem to be a problem for a company spending at an almost unfathomable rate. “Sears Holdings,” CNN notes, “which includes both Sears and Kmart, has been burning through cash at a rate of about $125 million a month.”
There’s a second plan in place, too, designed to incentivize loyalty in executives who might otherwise jump ship. 322 of those that Sears needs to keep in place during the reorganization would split $16.9 million per quarter.
The payouts, though, have to be approved by a judge. A hearing has been set for December 20th.
The payouts to executives is only one part of this problem. Sears and Kmart reportedly promised staff severance packages as they ramped up layoffs.
Shelia Brewer worked for full-time at a Kmart for 17 years. When she was laid off, she was promised a severance package for eight weeks. Instead, she got nothing. The payments were halted as part of the bankruptcy.
“It hit me hard. I was already struggling as it was,” she told CNN.
She’s understandably upset about the new bonus scheme. “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.”
“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,” Carrie Gleason, campaign manager for Rise Up Retail, told reporters. “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.”