More Than A Dozen Bankrupt Companies Commit To Paying Millions In Bonuses
Nineteen of the approximately 100 companies that filed for bankruptcy during the pandemic have committed to paying millions in bonuses to their executives as many Americans remain unemployed, according to a Bloomberg News analysis.
- The Hill reported that the sum will amount to $131 million in retention and performance bonuses, both before and after filing for bankruptcy.
- Some of these filings were just days before the company filed for bankruptcy, and creditors cannot prevent payouts made before the company enters bankruptcy court.
- The process for the US Trustee within the Department of Justice to question payments made after the filing is long and expensive. The Trustee challenged some “excessive” bonuses in recent weeks, but typically has minimal success, according to agency spokesperson Peter Carr.
The firms aim to keep their executives in the comeback from the COVID-19 economic crisis.
- According to Bloomberg, these are not novel actions, but in the mass unemployment crisis, “the context is unprecedented.”
- JCPenney will give $4.5 million to CEO Jill Soltau, with a total of $10 million awarded to executives.
- Hertz committed to giving $1.5 million to three top executives three days before filing for bankruptcy in May. The rental company slashed 10,000 jobs in North America due to COVID-19.
- Chesapeake Energy said it would give $25 million in bonuses to 21 executives, but they would have to return the payments “if certain conditions are not satisfied.”
- Satellite company Intelsat SA awards CEO Stephen Spengler a $6.9 million bonus, though the Justice Department disagrees with the incentive program that yielded this payment.
JCPenney, Frontier Communications Corp., Chesapeake, and Intelsat SA declined to comment to The Hill.