Macy’s Inc. has added its name to the growing list of struggling retailers to make significant payouts to top executives amid layoffs and other financial challenges borne of the coronavirus pandemic.
The department store reported in several filings with the U.S. Securities & Exchange Commission that on July 9 it doled out around $9 million in executive bonuses, including restricted stock worth $3.7 million to CEO Jeff Gennette and $1.8 million in restricted stock to chief transformation officer Danielle Kirgan.
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The payouts, first reported by Bloomberg, came days after the New York-based corporation — parent to the Macy’s, Bloomingdales and Bluemercury brands — said it would eliminate 3,900 corporate and management positions, or about 3% of its total workforce, citing significant business impact stemming from the coronavirus pandemic.
The retailer was forced to shut all its stores in mid-March as COVID-19 took hold in the United States and it announced on March 30 that it would furlough the “majority” of its workforce. At that time, Macy’s froze both hiring and spending, and suspended its quarterly dividend. In addition, Gennette announced he would forgo his salary, with senior members of the management team taking pay reductions.
In a statement shared with FN today, Macy’s pointed to these steps, which it said it had taken to preserve cash, and added that “our CEO and Board receiving no cash compensation for an extended period of time.”
“We also delayed our annual equity grants to Management and the Board,” the statement continued. “In our recently filed Form 8-K, we disclosed that we would be restoring NEO salary and director cash compensation and instituting our delayed equity awards. We will fully describe the 2020 compensation plans in the 2021 proxy filing.”
Macy’s is far from the only ailing department store to face flack about its financial decisions amid tough economic times. Just this week, a Justice Department lawyer asked a judge reject bankrupt Neiman Marcus’ key employee incentive plan (KEIP) unless executives can prove they helped boost NMG’s earnings.
Attorneys for Neiman Marcus are set to ask a U.S. bankruptcy judge today to approve a KEIP that would award a maximum of $10 million to eight top execs — with a payout of as much as $6 million going to CEO Geoffroy van Raemdonck. The retailer, which filed for Chapter 11 protection on May 7, has said these bonuses would go to members of its workforce who are “critical to day-to-day operations” and would be “difficult and costly” to replace.
Similarly, JCPenney, which is also wading through Chapter 11 proceedings with plans to ditch a couple hundred stores and layoff thousands of workers, also faced negative headlines for paying out executive bonuses days before filing bankruptcy in May.
It’s become a typical tale for down-on-their-luck retailers that find themselves on the bankruptcy court docket: In March, a group of Toys “R” Us creditors filed suit claiming the toy sellers’ former senior leaders and corporate directors pocketed a collective $16 million days before the company entered into Chapter 11 bankruptcy protection in September 2017. Similarly, in 2018, debt-saddled Sears filed a motion in bankruptcy court seeking approval to pay up to $25 million in executive bonuses during Chapter 11 proceedings — just weeks after it announced nearly 200 additional store closings and subsequent layoffs.