Sears managers, execs will still pocket big cash bonuses even though retailer is closing
Sears says the key staff are needed to help wind down its operations
Sears Canada will pay a final $2.8 million in retention bonuses to 36 head office staff, even though the retailer's restructuring efforts failed and the company is closing its doors.
Promised bonuses were only supposed to be paid in full if the company found a way to survive. However, Sears got court approval on Wednesday to continue paying retention bonuses to key staff such as executives and managers who will now steer the retailer through the wind-down and liquidation process.
In total, Sears will end up paying up to $6.5-million in bonus payments to head office staff from the time it filed for insolvency in June until it closes for good.
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Meanwhile, more than 16,000 employees have recently lost or will soon lose their jobs without receiving any severance, and many of them will likely collect reduced pensions.
"Can I use the F-word?" said Mina Iannino who lost her Sears merchandiser job in Toronto in March and then had her severance cut off in June.
"I'm really upset. I'm disgusted with this company," she said about the ongoing bonus payments.
When Sears became insolvent in June, it pledged to pay up to $7.6 million in bonus payments to entice 43 key senior managers and executives to stay and help keep the retailer afloat. Sears has already doled out $3.7 million of that money, and some of the recipients have since quit their jobs.
In the new, amended plan, the company will pay up to $2.8 million more in bonuses to 20 of the original 43 key staff along with 16 other staff members.
In total, Sears will dole out $1.1 million less than originally planned. However, the 20 original staff members still getting bonuses will receive as much as, or more than, they were promised when the company first devised the program.
Rather than helping the retailer liquidate, Iannino believes the bonus-worthy staff should show solidarity with their laid-off employees and refuse to do their jobs.
"They should just walk out and leave this company high and dry," she said.
'It baffles the mind'
Jennifer Holder, who was laid off from her Sears sales job in Toronto, says the revised bonus plan makes no sense.
"It baffles the mind," said Holder, who worked for Sears for 28 years. "I can't believe they're worried about securing bonuses for execs when the employees are looking at going through the Christmas season with no real job."
But according to court documents, the 36 staff members receiving the extra cash are considered "essential" to Sears' operations as it starts liquidating its remaining 130 stores on Thursday.
The key staff will oversee liquidation sales, the sale of additional Sears assets, financial matters and human resources and pension issues.
Retention bonuses are common in situations where struggling companies need to entice employees not to jump ship.
The recipients will receive their bonuses either when they are laid off or on March 31, 2018. A small number of executives won't get theirs until April 30, 2018.
Meanwhile, former Sears workers can apply for money from a hardship fund created in August.
Company chairman Brandon Stranzl donated the fund's entire amount of $500,000. It came from the retention bonus he received before he stepped down from his job this week.
Sears employees have complained that the hardship fund contains too little cash and that whatever money a laid-off employee gets is clawed back due to Canada's employment insurance rules.
For some of them, knowing that top staff are still collecting bonuses has just added to their frustrations as they struggle to adapt to life after Sears.
"Why should they get a bonus if we're not getting anything at all?" said Holder.