Even after two Chapter 11 filings in almost two years, a CEO that has only been with the company since July of 2004 and stores closing all over the country, Franks Nursery is saying that if some executives stay at the company until December, they will receive bonuses worth about half of their annual salaries, according to The Detroit News.
“The retention plan would give bonuses of $605,934 to 10 executives at Franks. The new CEO Walter Spokowski, who earns an annual salary of $275,000, could receive $137,500 for staying at the company through Dec. 31, 2004, according to records filed in U.S. Bankruptcy Court Southern District of New York,” states The Detroit News.
The bonus structure is being justified by the fact that these people will soon be out of a job. However, when the second Chapter 11 happened in September, all of the Franks employees were asked to leave right away without the opportunity to stay and get bonuses. As of right now, “it is unclear if Franks’ 2,800 employees will get severance pay or other compensation, although some Franks employees say they have not received severance,” stated The Detroit News.
Whether employees are compensated or not, a number of suppliers to the company have been left holding the bag because Franks was not able to pay some bills and stopped shipment on all of the product that was coming in close to the filing. Growers especially are pretty confused because unlike the hardgood companies, they have to dump the product that they can’t sell, which many of them had to do. Plants are different than any other product, and when a grower has to dump product, that means a significant loss, and for some the loss was in the $100,000 and even $1,000,000 range.
“Under terms of the plan, Franks executives in finance, legal, human resources and technology operations are eligible for bonuses. They also would receive their full salaries. A hearing on the plan will be held Friday,” stated The Detroit News.
The news outlet also states that CFO Alan Minker may possibly receive a $130,000 bonus, while legal assistant Susan Miller stands to receive $25,000 if both of them stay until Dec. 31, 2004.
In another addition to excessive spending on bonuses, Franks has hired the liquidation consultant Great American Group where the consultants can be receiving about $750,000 for taking care of all of the 169 store closing sales.
According to The Detroit News, “The retention plan will be paid out of money from the unsecured creditors committee.”