Friday, April 11, 2003
Executives and others are due millions when the bankruptcy case ends.
KNIGHT RIDDER NEWSPAPERS
DETROIT -- As Kmart Corp. emerges from bankruptcy this month, it will reward about 7,800 employees -- from top executives to pharmacists -- with bonuses for sticking with the retailer through its toughest period in a century.
Retail and turnaround experts say these kinds of bonuses help companies keep their most talented workers during trying times. But some say the number getting an emergence bonus appears excessive, with one critic calling it "piggish" because Kmart's survival after bankruptcy is not guaranteed. Chairman Jim Adamson will walk away from Kmart with a $3.6 million bonus when the Troy, Mich., discounter comes out of bankruptcy by April 30. Adamson has been Kmart's chairman since shortly before the retailer declared bankruptcy Jan. 22, 2002, and was its chief executive for 10 months.
Julian Day, Kmart's chief executive since January and its president for just over a year, gets a $1 million bonus. The retailer's chief restructuring officer, Ron Hutchison, takes home an extra $1 million.
Who will benefit
According to documents filed in Kmart's bankruptcy, as of Jan. 1, 7,841 employees are in line for the bonuses. Among them: vice presidents, regional managers, 1,745 store managers and 2,710 pharmacists and pharmacy managers.
Kmart said that the entire program, excluding Adamson and other top executives, would cost $150 million.
Kmart has not disclosed the average amount of the bonuses or the range. They got 30 percent of their bonuses Sept. 30 and 20 percent more Jan. 1. The rest hinges on Kmart's coming out of bankruptcy.