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Circuit City wants to pay execs bonuses

Wire Reports
Published: February 10, 2009

Circuit City Stores Inc., now liquidating the last 567 of its 721 stores, says incentive bonuses are needed to dissuade 154 executives and other workers from leaving before the company is dissolved.

Bloomberg News reported today that the Henrico County-based Circuit City?s proposal came in a motion filed in federal bankruptcy court in Richmond.

Circuit City proposed that 16 executives would split $2.3 million if they all achieve their targets, and the remaining non-managerial workers would be in line for $1.62 million if the bankruptcy judge goes along with the idea at a Feb. 25 hearing.

Circuit City also wants an additional $750,000 to distribute as discretionary bonuses to the non-management workers and others who aren?t covered by the program.

Circuit City was the second-largest electronics retailer in the U.S. when it filed under Chapter 11 in November. The final going-out-of-business sales were approved in January.

In all, the company will cut about 34,000 employees by the time the liquidation process ends by the first of April. A skeleton crew will stay on for as long as two years to finish winding-down operations.

Circuit City?s bankruptcy petition listed assets of $3.4 billion and debt totaling $2.3 billion as of Aug. 31. Papers show $898 million owing to the secured revolving credit lenders. Unsecured trade suppliers are owed another $650 million, the company said in a court filing.

?Bloomberg News
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That's what they need to do to keep them from bolting. This is fairly normal and needed in bankruptcy. The bonuses are performance based.

Also included is 2.4M for retention bonuses for non-management staff.
 
Its simply money to stay around till the end. I got a 5 figure bonus for agreeing to stay on board for the last 3 months at a telecom company back when the internet bubble burst, it was the only way to keep people working till the end. Its what happens when a company needs to keep its doors open a bit longer before they close.
 
OH NOS! Someone who doesn't know how the world works tried to incite anger in other ignorants but was derailed by the informed before he could do his damage!!!
 
Originally posted by: TheoPetro
OH NOS! Someone who doesn't know how the world works tried to incite anger in other ignorants but was derailed by the informed before he could do his damage!!!
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way too many words!
 
Wait a second.... yes, this is "normal", but step back for a sec. These payments are "normal" because in a "normal" economy, you have to provide solid incentive to keep the execs from bolting to other companies. In this economy, most of those execs (the same ones who ran the company into the ground by the way) don't have immediate other alternatives anyway, so you don't have to pay them much (if anything) to stick around. I don't see why the execs that botched the job to begin with should be given even more money as an incentive to stick around.
 
Originally posted by: PokerGuy
Wait a second.... yes, this is "normal", but step back for a sec. These payments are "normal" because in a "normal" economy, you have to provide solid incentive to keep the execs from bolting to other companies. In this economy, most of those execs (the same ones who ran the company into the ground by the way) don't have immediate other alternatives anyway, so you don't have to pay them much (if anything) to stick around. I don't see why the execs that botched the job to begin with should be given even more money as an incentive to stick around.
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So.. Um.. What should they do? Make these execs slaves and force them to stay until they are not needed anymore?
 
Originally posted by: TheoPetro
OH NOS! Someone who doesn't know how the world works tried to incite anger in other ignorants but was derailed by the informed before he could do his damage!!!
Click to expand...

What the fuck are you talking about? The only thing the OP did was post a news article discussing CC's need to give incentives to their employees.

How you managed to imply he was trying to "incite anger in other ignorants" from his simple posting which had zero dialogue means that you're the one who's not comprehending anything here, oh-so-ignorant-one.
 
As long as they get paid in Circuit City gift cards, I'm all for it. 🙂

Otherwise that money rightfully belongs to their creditors.
 
Originally posted by: spidey07
That's what they need to do to keep them from bolting. This is fairly normal and needed in bankruptcy. The bonuses are performance based.

Also included is 2.4M for retention bonuses for non-management staff.
Click to expand...

I'm sure Circuit City execs have recruiters knocking down their doors in this economy. :laugh:
 
Originally posted by: mugs
Originally posted by: spidey07
That's what they need to do to keep them from bolting. This is fairly normal and needed in bankruptcy. The bonuses are performance based.

Also included is 2.4M for retention bonuses for non-management staff.
Click to expand...

I'm sure Circuit City execs have recruiters knocking down their doors in this economy. :laugh:
Click to expand...

:laugh: Actually they would.

Job Posting for executives
MUST HAVES:
1) Experience with bankruptcy proceedings
2) Restructuring experience of 10,000+ employees

Yeah, I can see folks beating down their door.
 
Originally posted by: PokerGuy
Wait a second.... yes, this is "normal", but step back for a sec. These payments are "normal" because in a "normal" economy, you have to provide solid incentive to keep the execs from bolting to other companies. In this economy, most of those execs (the same ones who ran the company into the ground by the way) don't have immediate other alternatives anyway, so you don't have to pay them much (if anything) to stick around. I don't see why the execs that botched the job to begin with should be given even more money as an incentive to stick around.
Click to expand...

A) If they DON'T stick around, who is going to manage the liquidation/dissolving of the company's billions of dollars of assets? Someone has to do it, this isn't some little mom and pop shop that will just go away.
B) 2.3 million dividing amongst 16 executives really isn't very much money.
 
So funny you guys think no one in this economy can get jobs. The unemployment number is only 7.X%. Only losers and unlucky people are unable to find jobs. Good talent is hard to come by.

But with regards to CC, it's called a retention bonus. Execs know they can just walk away and the company can't function without them, so they have to implement an incentive package for them to stay, regardless of external environment. It's similar to extortion to some extent. But do the game theory. Execs threaten to leave, company says no retention, execs leave, company loses more than $2.4 million. Company spends $2.4 million for retention, saves $2.4m+ in potential loss.
 
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