Furniture Brands wants executives to get bonuses
Furniture Brands International Inc. has asked a federal judge to allow it to pay more than $5 million in bonuses to 55 employees, with up to $3.4 million of that going to to seven top officers, if it successfully sells its assets at auction.
The company said the bonuses would be paid to the employees for reaching goals that "will not be easy," the online publication Law360 reported. The company said that filing for Chapter 11 bankruptcy "creates difficulties for its employees and can lead to retention problems."
Executives get a bonus only if they sell businesses for more than they’ve already been offered, and if they keep certain borrowing below a budgeted amount, business columnist David Nicklaus of the St. Louis Post-Dispatch reported, calling the bonus plan "narrowly structured."
Furniture Brands, which is based in St. Louis, announced Sept. 9 that it had filed for Chapter 11 bankruptcy and will sell most of its assets to investment firm Oaktree Capital Management. Furniture Brands, which is led by chairman and CEO Ralph Scozzafava, listed $547 million in assets and $550 million in debt.
Despite losing $47 million in 2012, its sixth straight money-losing year, Furniture Brands earlier this year paid Scozzafava bonuses worth $541,000, boosting his total pay for 2012 to $1.98 million.
The bonus payouts for 2012 were the first in at least four years, the St. Louis Post-Dispatch reported. Formerly, the short-term plan paid nothing unless a target level of earnings was reached, but the company lowered the threshold for its executive bonus plan last year so a payout was possible even if the target wasn't reached, and that's what happened. Scozzafava's short-term bonus was 41 percent of his target amount.
The company said in March that the bonus changes were made because of concerns that it would not be able to retain top executives if the company continued to not pay incentive bonuses.
Scozzafava received a salary of $750,000 in 2012, a short-term bonus of $308,775, a long-term bonus of $233,169, stock worth $591,302 and personal plane flights valued at $91,958.
The company's losses mounted this year, culminating in a $40 million loss just in the second quarter of 2013.