Sears key employee retention and incentive programs OK’d by court

By Caroline Salls

Pittsburgh, Dec. 31 – Sears Holdings Corp. obtained court approval of key employee retention and incentive programs, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, Region 2 U.S. trustee William K. Harrington objected to the programs, which he said call for the company to set aside more than $25 million for potential bonuses to compensate the plan participants.

“Against the backdrop of running going-out-of-business sales, the shuttering of hundreds of stores and the presumed termination (either now and/or in the near future) of thousands of rank-and-file and hourly employees – the debtors are seeking authority to pay significant bonuses to their senior executive officers and to senior officers and managers of their various divisions,” Harrington said in the objection.

The U.S. Trustee said these are already “the most highly compensated of the debtors’ employees,” and many of them received pay raises right before Sears’ bankruptcy filing.

In addition, Harrington said the incentive plan would pay up to $8.1 million to senior executives, but “the debtors have failed to demonstrate that it is primarily incentive based.” Instead, he said the plan seems to be designed to ensure that the executives stay with the company through confirmation of its Chapter 11 plan.

The Dec. 31 order said the incentive program will be comprised of two performance periods, including Nov. 18 to Feb. 2 and Feb. 3 to April 14 periods, with the maximum total award opportunity for both periods to be $4.22 million.

Sears is a retailer based in Hoffman Estates, Ill. The company filed bankruptcy on Oct. 15 under Chapter 11 case number 18-23538.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.