Toys ‘R’ Us U.S. Trustee opposes bonuses for highly paid executives

By Caroline Salls

Pittsburgh, Nov. 28 – The U.S. Trustee overseeing Toys “R” Us, Inc.’s Chapter 11 case objected to approval of the company’s proposed $32 million senior executive incentive plan, according to a Tuesday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

“With no plan of reorganization on the horizon and great uncertainty as to the projected recoveries by creditors in the cases, the debtors filed the bonus motion, requesting, inter alia, authority to pay up to $32 million in bonuses to 17 of its most highly compensated executives,” Region Four U.S. Trustee Judy A. Robbins said in her objection.

Robbins said the proposed incentive payments would be in addition to $8.2 million in retention bonuses that five of the same executives received immediately before Toys “R” Us’ bankruptcy filing.

“It defies logic and wisdom, not to mention the Bankruptcy Code, that a bankrupt company would now propose further multi-million dollar bonuses for the senior leadership of a company that began the year with employee layoffs and concludes it in the midst of the holiday season in bankruptcy,” the objection said.

In addition, the U.S. Trustee said the metrics used to determine eligibility for the bonuses “are easy to satisfy ‘lay-ups,’ making the bonuses impermissible ‘pay-to-stay’ retention bonuses.”

Toys ‘R’ Us is a Wayne, N.J., toy retailer. The company filed for bankruptcy on Sept. 19 under Chapter 11 case number 17-34665.

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