Borders wants bankruptcy court to approve up to $8.3 million in executive bonuses
Ann Arbor-based Borders Group Inc. is seeking permission to pay out up to $8.3 million in bonuses to its top executives if they are able to help the company survive bankruptcy.
The court papers also reveal that Borders has not given raises to the corporate employees at its Ann Arbor headquarters in four years.
The bonuses would be split into two segments: up to $7.1 million for 17 of the company's top executives and $1.2 million for 25 other "director-level" employees. The bonus for Mike Edwards, CEO of Borders Group subsidiary Borders Inc., could be as much as $1.68 million. The company's executive vice presidents could get up to $1.08 million.
The bonuses would be distributed if Borders:
â€¢ Can convince the bankruptcy judge to approve a reorganization plan that involves the company's survival. For the top executives, the bonuses are also tied to the company's ability to get the plan approved within five months of its submission.
â€¢ Successfully attracts a buyer that would continue to operate the company.
"No amounts will be paid if the debtors confirm a plan of liquidation or consummate a sale to liquidators," the compensation consultant said.
The consultant said Mercer conducted an analysis of comparable bankruptcy scenarios and determined that the proposed bonuses were reasonable.
Companies that have filed for bankruptcy argue that executive bonuses are reasonable because a sudden leadership exodus could hurt the company's chances of survival.
Borders filed for Chapter 11 bankruptcy protection on Feb. 16 and is in the midst of closing 226 superstores, including the store on Washtenaw Avenue in Arborland Center. The company employs about 500 workers at its headquarters in Ann Arbor.