Chutzpah has a new definition. Execs of bankrupt company demand bonuses or threaten to quit!
RICHMOND, Va. (AP) — Circuit City Stores Inc. is asking a U.S. Bankruptcy Court judge to allow it to give incentives to executives and other workers to stay with the company during the wind-down process, according to court filings.
The company said the bonuses are needed to dissuade the 154 employees from leaving before what was the nation’s second-largest consumer electronics retailer closes for good.
Employee turnover threatens the wind-down plan and the company’s ability to “maximize value for their estates and stakeholders,” Richmond-based Circuit City said in the filing.
Circuit City has already had some key employees leave, including former chief financial officer Bruce H. Besanko, who will start in a similar role at OfficeMax Inc. on Feb. 16.
The company filed for Chapter 11 bankruptcy protection in November as it faced pressure from vendors, heightened competition and waning consumer spending. Last month Circuit City announced it would liquidate its 567 U.S. stores, cutting more than 34,000 jobs.
Going-out-of-business sales should last through March, after which the stores will be closed. A small staff will keep working at the corporate office through the process.
Under the company’s proposal, 16 executives would split up to $2.3 million if they achieve specific target tasks such as staying within the wind-down budget and obtaining the sale of Circuit City’s Canadian and Internet assets. The remaining non-managerial workers would share no more than $1.62 million.
The company, which will present the plan to U.S. Bankruptcy Judge Kevin Huennekens at a hearing in Richmond on Feb. 25, also is seeking a discretionary bonus pool of an additional $750,000 to distribute to the non-management workers and others who aren’t covered by the program.