Judge Refuses Bonuses for Executives at Bankrupt Sports Authority
A U.S. bankruptcy judge refused on Tuesday to allow Sports Authority to pay up to $2.85 million in bonuses to four executives for overseeing the winding down of the national sporting goods chain. Sports Authority filed for bankruptcy in March with hopes of keeping some of its 464 stores open, but battles among lenders and suppliers eventually scuttled those plans. Its final stores closed last month. Sports Authority said the bonuses were essential to ensure executives squeeze the most value out of its assets by adhering to a budget and preventing waste. However, Judge Mary Walrath felt otherwise during a hearing, calling the bonuses "inappropriate to pay senior executives a bonus when all the employees are losing their jobs."
Total Retail's Take: I couldn't agree more, Judge Walrath! While bankrupt companies often get court approval to make special bonus payments to top executives for hitting performance targets designed to maximize value for creditors, giving multimillion-dollar bonuses while the company is going under is a little absurd. In addition, the payments are routinely opposed by the U.S. Trustee, which is the government's bankruptcy watchdog, and by unions — particularly when aspects of the bonus programs are filed under seal. During the hearing, the company asked to keep the identities of the executives under seal to "minimize detrimental impacts on employee morale," which prompted an outcry from some of the 14,000 former staffers. Last week, we reported that it seemed just a little too odd that Sports Authority wanted to pay its top execs a bonus.
