Toys R Us won court approval on Tuesday for plan to pay top executives up to $21 million in bonuses.
According to Toys R Us lawyer Joshua Sussberg, Toys R Us Chief Executive David Brandon, one of the bonus plan beneficiaries, estimates that only half of the US population has completed their holiday purchases – indicating that there is still time to motivate shoppers “to buy as much as they can.”
Toy R Us makes 40% of net sales in the fourth quarter and its performance during the holiday season could drive the outcome of its attempted turnaround during a seismic shift in the retail industry.
Judge Keith Phillips approved the bonus plan over an objection by the US Trustee, a government bankruptcy watchdog, after Toys R Us advisers called the payments reasonable.
Under the Toys R Us plan, 17 eligible executives would split about $21m if earnings before interest, depreciation and amortisation for this fiscal year reach $641m. Executives would split about $14m if earnings reach $550m. The terms were revised after a complaint from unsecured creditors, who ultimately backed the plan.
The US Trustee blasted the proposal, saying five of the potential recipients split $8.2m in retention bonuses a week before the 19th September bankruptcy filing, and noted other salary perks for David Brandon such as aircraft and limousine use.
On Monday, Toys R Us UK said it plans to close at least 26 of its 105 stores in Britain in 2018. It has not yet unveiled planned US store closures.