Fighting with Toys R Us Plans to pay executives Millions in bonuses: bidirectional: NPR


A bankruptcy court judge approved a plan for Toys R Us to pay its top executives millions in bonuses, even as the company struggles to stay afloat.

Eric Gay / AP

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Eric Gay / AP

A bankruptcy court judge approved a plan for Toys R Us to pay its top executives millions in bonuses, even as the company struggles to stay afloat.

Eric Gay / AP

A bankruptcy judge has granted permission to the Toys R Us distressed to pay millions of dollars in bonuses to executives after the company argued that it was necessary to motivate its high command during the holiday shopping season.

Judge Keith Phillips The company can grant $ 14 million in incentives to its top 17 executives. One caveat: First fiscal year earnings must reach $ 550 million. Executives could receive even more if profits reach $ 641 million, but company attorney Joshua Sussberg said the goal would be "incredibly difficult to achieve," Reuters reports.

In a presentation, Toys R Us argued, "it is the [company’s]] employees, and more particularly the management team, who must execute at this critical time and provide the basis for a successful change," reports CNN Money.

Phillips authorized the plan on the objection of Judy Robbins, a lawyer with the US Trustee Program. UU The Department of Justice, which has the task of serving the interests of creditors.

"It defies logic and wisdom, not to mention the Bankruptcy Code, for a bankrupt company to propose more multimillion-dollar bonuses for top managers of a company that started the year with employee layoffs and ends in the middle of the season. bankruptcy vacation, "Robbins said in his presentation, according to CNN Money. "Apparently, this Christmas, Toys" R "Us intends to offer not only to children their best smiles of the year, but also to those inside.

<img src =" https: //media.npr .org / badets / img / 2017/09/19 / gettyimages-839973044_sq-b35a2405a2a65b578942b145a01adce5b0d809e5-s100-c15.jpg "data-original =" gettyimages-839973044_sq-b35a2405a2a65b578942b145a01adce5b0d809e5-s100.jpg "clbad =" img lazyOnLoad "alt =" Advances of the holiday season, Toys R Us files for bankruptcy [19659013] Robbins argued that Toys R Us executives are already paid more than other retail leaders and already receive luxurious benefits such as chauffeured cars and private air travel.

But during Tuesday's five-hour hearing at his Richmond, Virginia, court, Phillips said Toys R Us' plan was "fair and reasonable under the circumstances" and that it represented good business judgment, reports USA Today. Phillips noted that no creditor or lender opposed the plan.

In September, Toys R Us, the largest toy retailer in the United States, filed for bankruptcy. But he emphasized at that time that his approximately 1,600 stores around the world would remain open and operate as usual. In a statement, CEO Dave Brandon said, "our goal is to work with our creditors and other creditors to restructure the $ 5 billion of long-term debt on our balance sheet."

Brandon would be one of the beneficiaries of the plan bonus. Its annual compensation, including other incentives and bonuses, already amounts to $ 12.5 million, reports USA Today.

CNN Money says that Toys R Us has not reported annual profits for five years, and since then it has lost almost $ 2 billion. 19659008] The next few weeks are of vital importance for the company as people stock up on gifts for children. Toys R Us "produces 40 percent of net sales in the fourth quarter and its performance during the holiday season could boost the outcome of its attempt to change during a seismic change in the retail industry," Reuters reports.

  Retailers struggling to adapt to changes in consumer habits

As customers increasingly turn to e-commerce, retailers have been struggling mightily this year, with several US chains requesting Chapter 11.

] And NPR Yuki Noguchi has informed that the problems of the industry are just beginning. With more than 1,000 shopping centers across the country, experts say that there are simply too many physical stores and they are crumbling under the weight of online shopping.

Sussberg, the lawyer for Toys R Us, says that it is still not too late for the company to change things and estimates that only half of the country has finished its Christmas shopping.

He says the company expects to present a new business plan for this summer, according to Reuters, with the aim of going bankrupt before the holiday season of 2018.

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