Revised retention bonuses for top RadioShack execs have been approved by a judge in the company's bankruptcy case.
Headquartered in downtown Fort Worth, Texas, the company, which was founded in 1921, is set to receive a $1.5 million bonus plan for the eight top executives. This decision comes over the objection of the U.S. Trustee in RadioShack Corp.’s Chapter 11 bankruptcy case. Another million will be split among about 30 lower-level executives.
Judge Brendan Shannon said that while he understood the concerns the trustee had over the key executive’s incentive plan, he was convinced that the executives would be “up to their elbows” with the sale of 2,000 RadioShack stores. The terms of the KEIP, or key employee incentive plan, payout had been reduced through negotiations ($500,000 less than initially proposed).
The bonuses are slated to be paid out to key executives in three stages after the successful conclusion of a sale of about half the chain’s stores. RadioShack originally had 4,297 stores in the U.S. with 274 open in Mexico. An additional 900 locations are held and operated by independent dealers, primarily in small towns.
Full details on who would receive the bonuses will be sealed when they are filed with the court. Those who participate won’t be eligible for severance pay. RadioShack CEO Joseph Magnacca, according to The Wall Street Journal (subscription required), could collect about $487,000 of the $1.5 million executive bonus pool monies. The U.S. Trustee serves as the Justice Department’s watchdog in bankruptcy cases and objected to the plan, saying the bonuses weren’t tied to any "measurable incentives related to the sale process."
RadioShack’s largest shareholder, hedge fund Standard General, has said it will buy half the company’s 4,000 stores. It even had a deal with Sprint for the wireless carrier to take space in almost half of them, keeping them open. The idea was to co-brand the companies under the two names (think RadioSprint or SprintShack). Opening bids for the stores on the market have been estimated to be worth $200 million. Standard General also agreed to bid at least $20 million for the rights to the RadioShack brand.
Judge Shannon has set an auction date of March 23 if competing bids emerge for the RadioShack assets. Properties that are not sold or auctioned off will be closed by the company.
Photo: Nicholas Eckhart | Flickr
