Judy A. Robbins has filed a strongly worded objection to the company’s plan to pay between $16m and $32m to its 17 most highly paid executives.
She stated that “It defies logic and wisdom” that Toys R Us is proposing “multimillion-dollar bonuses for the senior leadership of a company that began the year with employee layoffs and concludes it in the midst of the holiday season in bankruptcy. “Apparently, this Christmas, Toys R Us intends to deliver not only ‘children their biggest smiles of the year’ but the insiders, too,” which is a reference to court claims by Toys R Us that its No. 1 goal is to keep children happy.
US trustees are assigned to bankruptcy cases to make sure bankruptcy laws are followed and to administer regulations involving claims by creditors.
Toys R Us filed a motion Nov. 15 asking for permission for an executive incentive bonus plan that would give its top executives $16 million in extra pay. Those bonuses would double to $32 million if certain financial goals were reached.
The trustee also argued that the incentive bonuses are questionable in light of the fact that Toys R Us does not yet have a reorganization plan in place and that there is “great uncertainty” that creditors will recover the money owed to them by the company. She also commented that Toys R Us did not provide enough information on how the performance guidelines for the bonuses were set.
Toys R US, in seeking approval of the incentive pay, told the bankruptcy court that motivating its top employees was crucial to the company’s successful turnaround.
Bankruptcy Judge Keith L. Phillips, who is hearing the case in Richmond, Va., is expected to rule on the motion in December.