Borders, in Bankruptcy, Plans to Pay $8.3 Million in Bonuses
Borders Group Inc. (BGP), after filing for bankruptcy in February with plans to close about a third of its stores, said it plans to pay key employees as much as $8.3 million in incentives and retention bonuses.
The second-biggest U.S. bookstore chain asked a judge to approve its plan in a filing yesterday in U.S. Bankruptcy Court in New York, saying it historically compensated employees through incentives.
The main awards would be part of a program budgeted for as much as $7.1 million. The size would be calculated after the company files a reorganization plan or gets approval for a sale of the company, Borders said. The rest of the money is budgeted for retention bonuses, it said.
Under the incentive program, Borders President Michael Edwards, chief executive officer of the chain’s parent company, Borders Inc., would get as much as $1.7 million in bonuses, according to the filing. “Award opportunities” under the plan would be 150 percent of historical levels for the company’s incentives, it said.
Employees would get no incentive payments if Borders was liquidated, it said. Nor will they get a bonus for 2010, “due to the debtors’ declining financial performance,” it said.
Borders filed for Chapter 11 protection after management changes, job cuts and debt restructuring failed to make up for sagging book sales in the face of competition from Amazon.com Inc. (AMZN) and Wal-Mart Stores Inc. (WMT)
The company made an emergency request to close at least 200 of its 642 stores and said this month it would close more. The stores are under the Borders, Waldenbooks, Borders Express and Borders Outlet names in the U.S. and Puerto Rico.
The case is In re Borders Group Inc., 11-10614, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Tiffany Kary in New York at tkary@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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