A Curious Sideshow in the Death of Sears

As The Curmudgeon has predicted in the past (here and here), the death of Sears draws near: twice in recent months it has announced the closing of large numbers of Sears and K-Mart stores and the company filed for bankruptcy.

But some Sears executives are not so eager to get off the gravy train.

As reported by CNN:

Sears is seeking court approval to pay executives as much as $25 million in annual bonuses while the company struggles to restructure in bankruptcy.

 Three top executives could get nearly $1 million each if the company goes out of business. If Sears remains in business, they could get nearly $500,000 each for hitting the top performance targets.

You have to wonder what kind of “performance targets” might earn someone a bonus in a company that’s going under for the third time.

Other Sears executives are in line for some extra pay, too:

Sears filed two different types of bonus plans in bankruptcy court Thursday. The first is for the top 18 “key” executives, who would collectively get as much as $2.1 million per quarter up to a maximum of $8.5 million. The bonuses would only be paid in full if Sears reaches its cash-flow targets. Sears Holdings, which includes both Sears and Kmart, has been burning through cash at a rate of about $125 million a month.

 A second retention bonus plan was designed to encourage 322 other unnamed executives to stay put during Sears’ reorganization. They would collectively get $16.9 million over the course of a year, which works out to an average of about $52,000 annually per executive. No executive could receive more the $150,000 in bonuses for staying with the company during the bankruptcy process.

It’s hard to understand the rationale for these bonuses.  Will the company argue that it can’t successfully fail without these people?

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