Court OK's Circuit City Stay-On Bonuses
By Alan Wolf -- TWICE, 2/26/2009
Richmond, Va. — A federal bankruptcy court here has approved Circuit City’s request for nearly $4 million in stay-on incentives for staffers.
The bonuses include $1.63 million for 14 senior executives, $1.62 million for 37 lower-level employees, and $750,000 for other workers not covered by the plan, the Associated Press reported.
James Marcum, Circuit City's vice chairman and acting president/CEO, removed himself from the plan to appease critical creditors.
The chain said the bonuses are necessary to keep essential staffers on board through the wind-down process, which could add $250 million to the company’s value if successfully completed.
Employees will be paid in increments based on the completion of their tasks, which include liquidating remaining assets, shutting down remaining businesses and reconciling claims.
The original plan was modified to address objections by Circuit City’s unsecured creditors. Changes include Marcum’s forfeiture of $375,000 in potential bonuses; creditor control over $500,000 of the $750,000 discretionary bonus pool; and more stringent bonus targets, including staying within budget and selling the company’s Canadian and online operations.
Separately, a House Judiciary Committee is expected to hold a hearing next week over why Chapter 11 bankruptcy protection failed to save Circuit City from insolvency, the AP report said.
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