Wednesday, February 11, 2009

Circuit City wants to pay execs bonuses

Circuit City Stores Inc., now liquidating the last 567 of its 721 stores, says incentive bonuses are needed to dissuade 154 executives and other workers from leaving before the company is dissolved.

Bloomberg News reported today that the Henrico County-based Circuit City’s proposal came in a motion filed in federal bankruptcy court in Richmond.

Circuit City proposed that 16 executives would split $2.3 million if they all achieve their targets, and the remaining non-managerial workers would be in line for $1.62 million if the bankruptcy judge goes along with the idea at a Feb. 25 hearing.

Circuit City also wants an additional $750,000 to distribute as discretionary bonuses to the non-management workers and others who aren’t covered by the program.

Circuit City was the second-largest electronics retailer in the U.S. when it filed under Chapter 11 in November. The final going-out-of-business sales were approved in January.

In all, the company will cut about 34,000 employees by the time the liquidation process ends by the first of April. A skeleton crew will stay on for as long as two years to finish winding-down operations.

Circuit City’s bankruptcy petition listed assets of $3.4 billion and debt totaling $2.3 billion as of Aug. 31. Papers show $898 million owing to the secured revolving credit lenders. Unsecured trade suppliers are owed another $650 million, the company said in a court filing.


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