Borders wants to distribute $125,000 severance payments to top executives
Ann Arbor-based Borders Group Inc., which is days away from completing liquidation sales at most of its 399 remaining stores, wants to distribute $1.75 million in payments to its top 14 executives.
Former Borders Group Inc. President Mike Edwards, also former CEO of the Borders Inc. unit, would receive a $125,000 severance payment under the company's latest proposal.
Melanie Maxwell | AnnArbor.com
The payments would include $125,000 apiece to former Borders President Mike Edwards, former Chief Financial Officer Scott Henry, Executive Vice President of Store Operations Jim Frering and Senior Vice President of Human Resources Rosalind Thompson.
Borders, in the motion, describes the payments as severance packages — not bonuses. Executives will not receive a bonus plan previously proposed by Borders because the company did not successfully emerge from Chapter 11 bankruptcy.
Edwards and Henry were "voluntarily terminated" on July 29, but Borders attorneys said in Friday's motion that the former executives "continue to work actively on a non-compensated basis to assure the successful sale of certain store sites and (Borders’) intellectual property."
It also said Frering, Thompson and the other managers — who still work for the company — "are working tirelessly for the benefit of all creditors, yet are currently working themselves out of a job upon completion of the task."
The motion went on to state that all the former executives "worked long, hard and to the absolute best of their abilities" on behalf of Borders "until the day they were terminated."
Edwards, who served as CEO of the bookselling Borders Inc. unit, recently declined an AnnArbor.com request for an interview. He told AnnArbor.com in a social media message that he was "moving back to the West Coast and getting on with my life."
Borders is believed to have up to 400 employees at its corporate headquarters in Ann Arbor when it announced July 18 that it would liquidate. More than 10,000 employees will lose their jobs at the chain's store network, including the flagship store in downtown Ann Arbor and the superstore in Pittsfield Township.
Meanwhile, former Ann Arbor corporate Borders employee Jared Pinsker filed a class-action lawsuit last week claiming to represent 300 Ann Arbor workers and accusing Borders of flouting a federal act that requires major employers to give their workers 60 days notice before laying them off.
In its motion Friday, Borders said corporate employees would receive 1 week of severance for every year of service up to a maximum of 12 weeks.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Mathew
Thu, Sep 15, 2011 : 7:34 p.m.
I was a GM whose store was shut in April. Trust me, we (meaning all salaried and all hourly, so everyone in the store) received *no* severance. While we were paid for any accrued vacation time at the time of separation, we lost any unaccrued vacation time for the year and ALL personal time. I had worked for the company for over 8 years, so was looking forward to the possibility of getting 8 weeks' (2 months!) pay upon leaving, however it was explained to us the moment the store closures were announced that there would be no severance. While off topic, I also wanted to get off my chest how I was informed my store was closing. During a DM visit the during the time we declared bankruptcy, our DM seemed concerned and asked what was on my mind. I said I was concerned stores would close and wanted to make sure mine wasn't one of them. She told me I had nothing to worry about, she was on the committee that decided store closures, and mine wasn't one of them. In fact, none of my stores, she said, were on the list. With that tidbit of information, I went about the rest of my day and enjoyed my weekend. The following week, I opened an article from The Wall Street Journal on-line and saw my store at the top of the list of store closures, as were several others in my district. Thanks Angie! Now that's integrity!
Crime Scene Borders
Mon, Sep 12, 2011 : 8:29 p.m.
Nothing surprising here -- just more of the same greed that resulted in the companies demise. The guys on top always come out looking squeaky clean.
snapshot
Fri, Sep 9, 2011 : 8:30 p.m.
What are some of the "buyout" sums for Ann Arbor city and school employees and officials that have been paid out over the years? For comparison.
J Shaker
Thu, Sep 8, 2011 : 11:41 a.m.
hmmm...up until now I had been feeling rotten about the closing of Borders. now i just feel for all those non-execs who lost their jobs. wish i could say i'm surprised by this. i hope they end up spreading the severance payments amongst the hourly workers.
bookseller
Wed, Sep 7, 2011 : 8:56 p.m.
those guys have a lot of nerve. they are just greedy. store employees are NOT getting severance but are working tirelessly to make the liquidation process go smoothly. store employees who have held their jobs for a much, much longer time than these management yahoos get NOTHING except the sadness of seeing their beloved store get dismantled piece by piece. for us, it has been much more than a job. i doubt these 4 execs can say the same. i hope the judge denies their request.
Ron Granger
Wed, Sep 7, 2011 : 11:07 p.m.
As a customer of the original State Street store, Borders was "dismantled piece by piece" the day that location closed. It all went downhill after that.
Bill
Wed, Sep 7, 2011 : 7:20 p.m.
Quoting: It also said Frering, Thompson and the other managers — who still work for the company — "are working tirelessly for the benefit of all creditors, yet are currently working themselves out of a job upon completion of the task." Interesting how the executives are working themselves out of a job but no mention of the employees at the headquarters or the stores that are also losing their jobs as a result of bad judgment on the part of the upper management looking for more compensation. Unfortunately bankruptcy courts routinely approve such requests, but it would be nice to see a judge that had concern for the other employees to deny this claim or make the payment apply to all as suggested by another reader.
Judy
Wed, Sep 7, 2011 : 5:58 p.m.
This is great, I have the same commit as I did for the Debbie Stabenow story. As long as companies are allowed to pay "No Corporate Taxes", (like GE and others) are allowed to send jobs (like the auto companies and others) to other countries, are allowed to pay the top brass bonuses before stock holders (like Bank of America and others) manufacturing jobs will "NEVER" come back to the US let alone Michigan. Let's face it "Both" branches of the US government are working for "Themselves", not for the hard working Americans. I work for a mid-size manufacturing company (for the past 27 years), I have seen the staff cuts (employees with 15, 20, 30 years) so their jobs go to other countries, so the top brass can make more money while the manufacturing group get "No Increases or 1 or 2% at best." The saying "The Rich get Richer and the Poor get Poorer"!!!!
AlwaysLate
Wed, Sep 7, 2011 : 5:01 p.m.
NO! ABSOLUTELY NOT! The lives of the Borders employees and their families that these heartless executives have ruined is beyond measure. If anyone is to get money as a severance it should the employees who have lost their homes...their savings...their retirement...their future. Shame on the courts if they allow this final insult!
Ron Granger
Wed, Sep 7, 2011 : 4:23 p.m.
The surprising thing about Borders is that it didn't fold sooner. That ship has been sinking for many years. The latest CEO was brought in to try and clean up a terrible mess that was over a decade in the making.. How many CEOs has Borders had over the past three years? Four? The chance of turning Borders around was *extremely* slim. Many CEOs had previously failed to do it. You only take a job like that if you get paid either way. Otherwise, why would an experienced and talented CEO bother? A CEO has to make tough decisions. Those decisions may cost them, or thousands of employees, their jobs. If the best decision means you won't get a paycheck next week, that can cloud your judgement and prevent you from making the best decision. The investors and owners need the executives to make the best decisions. That's why executives need to have guaranteed exits. You cannot attract and retain a good CEO any other way. If you owned the company, you would need to provide incentives for the exec team. Otherwise, why would talent join your company?
Laurel
Wed, Sep 7, 2011 : 4:13 p.m.
Why is this a surprise to anyone?? They're just following the example of the big banks... Our nation is in a state of crisis, with an overwhelming epidemic of entitlement. It's enough to make you sick.
SimonDarcourt
Wed, Sep 7, 2011 : 1:37 p.m.
The headline on this article is a little misleading... I read it to mean that all execs would get a combined $125,000 in severance, which (depending on the number of qualifying 'executives') might not have been too outrageous. I wonder how the creditors that these staff are 'working tirelessly for the benefit' of feel about the proposed payout.... let alone the 10,000 people who lost their jobs.
drewk
Wed, Sep 7, 2011 : 4:11 p.m.
The article clearly states "125,000 apiece".
Wolf's Bane
Wed, Sep 7, 2011 : 1:31 p.m.
These people are a joke, a real joke. If anyone deserves the severance packages it is the lowly employees who tried to faithfully sustain unrealistic business strategies. Gosh, what is wrong with today's executives...?
Carole
Wed, Sep 7, 2011 : 1:13 p.m.
I didn't read the article, but what I'm going to say is this -- any severance pay should go to those individuals who daily worked in the stores -- if the executives were so great and on top of their jobs, Borders would not be closing.
Tammy Mayrend
Wed, Sep 7, 2011 : 1:08 p.m.
Most employees got a severace (if they even got one) based on the number of years they worked there. If you were there two years you got (blank) many weeks of severance right? So WHY would these execs deserve anything else.? Why $125,000 each? Honestly they shouldn't get anything. They knew the company was going under, so they should have tightened their belts like everyone else and saved for the end. Luckily for them they have a rather large fluffy cushion from which to draw upon, which is unlike the vast majority of former Border's employees.
Barb
Wed, Sep 7, 2011 : 1:35 p.m.
Execs such as these are hired with contracts vastly different than the at-will agreements most employees have. That's why they get treated differently than everyone else. This happens at ALL corporations. The rich get special treatment.
Tom Todd
Wed, Sep 7, 2011 : 12:47 p.m.
this is the new society we live in, the rich must get richer and the middle class, more poor.
Scott
Wed, Sep 7, 2011 : 12:12 p.m.
Severance package...bonus...whatever. A turd is still a turd no matter what you call it. And this one has been laid at the feet of all the current and former Borders "underlings" who worked hard to keep the company going, while the executives made stupid and damaging decissions that led to it's demise. What a slap in the face. Typical corporate America these days.
pseudo
Wed, Sep 7, 2011 : 12:11 p.m.
Borders has done a lousy job in helping its employees move forward in their careers. It is reflective of exactly that management and they way they ran the company. Distribute the money to everyone below a manager level!
A2lover
Wed, Sep 7, 2011 : 11:53 a.m.
They are taking a leaf out of the Wall Street collapse, paying big money to those that caused the problem in the first place. Typical American way of working, it's no wonder this country is in the mess it's in. No one seems to have any logic, ethics, sensibility or fairness - it's all about ME, ME! ME!! Also, "one weeks pay for every year an employee has been at Borders, UP TO 12 YEARS." What's wrong with that picture? So...if I'm an employee who has devoted 15, 20 or more years to the company all I can get is 12 weeks of salary? Then that's not one weeks pay for every year I've been there! Poorly worded plan, not to mention unscrupulous by Borders; stiffing the worker bees again. As has ben mentioned, take all the darn money and divvy it up between everyone, the big wigs and the employees. It's the fairest way, considering what a debacle this has been.
johnnya2
Wed, Sep 7, 2011 : 4:30 p.m.
Umm, so what about the actual CREDITORS? 12 weeks is more than fair. It is 3 months worth of pay. You can also collect unemployment until finding a new job. There are many creditors who will receive pennies on the dollar for money they are owed if they are lucky. If you think it is all other big businesses, I will relate a KMART BK story where a landscape/snow plowing company had the KMart contract. They plowed lots and had to hire people, buy plows and service KMart. After BK, Kmart paid them ZERO NOTHING. This local small business was forced to layoff employees, have trucks repossessed and eventually declare bankruptcy himself. Employees should get some, buy 3 months pay for NOT working seems like a decent deal to me no matter how long you were there
Elaine F. Owsley
Wed, Sep 7, 2011 : 11:42 a.m.
Aren't these the very people whose poor management and decision making resulted in the destruction of a good company and the loss of hundreds of jobs? Surely you jest!!
Goober
Wed, Sep 7, 2011 : 10:56 a.m.
Dont't drink the water! You will come up with illogical ideas like this if you do! Interesting how our society has evolved to the extent that we are brazen enough to recommend a bonus to the same people that drove a business into the ground. Criminal, to say the least! All involved should be ashamed of themselves. An example of greed at it's finest! All availabe funds should go the bulk of dedicated employees who actually helped grow Borders over the years.
Les Gov
Wed, Sep 7, 2011 : 10:44 a.m.
What this article doesn't state is how long these top 14 worked for the company. Edwards just got to Borders. He is responsible for the collapse. He did make a major error in judgment by not researching the company before he took the job. By the time Edwards took the position the company was well past saving. I'm not sure about the time of service for the others. I do believe many of them have been at Borders for a long time and are directly responsible for the implosion that took place at Borders. Since they made the decisions that caused the company to collapse they shouldn't receive any payment. When you make bad decisions you have to live with the results. Perhaps this money can all be given to the part time folks who simply tried to follow the failed policies that these so call executives put in place.
A2comments
Wed, Sep 7, 2011 : 10:35 a.m.
They should get the same severance everyone else does. Edwards came in knowing how bad things were and was more than fairly compensated.
John B.
Wed, Sep 7, 2011 : 3:56 a.m.
This is no surprise whatsoever, but they've (still) got a lot of darn gall to even propose this. Particulary after allegedly violating Federal Labor laws with their rank and file employees' terminations. Here's a thought: take that money, and divide it equally amongst the 400 remaining employees. That would be about $4300 each. The fat cats can get their $4300 too, just like everyone else. For those 14, at least it will pay for a few months' worth of Mercedes lease payments, poor babies....
John B.
Wed, Sep 7, 2011 : 3:57 a.m.
"Particularly" (aaargh...). Need an edit function!!
Tom Joad
Wed, Sep 7, 2011 : 3:55 a.m.
I'm extremely proud to be a customer of Amazon.com I haven't bought a book a Borders in over a decade. This is why.
djacks24
Wed, Sep 7, 2011 : 2:06 p.m.
You really believe Amazon wouldn't do the same thing in similar circumstances?
clownfish
Wed, Sep 7, 2011 : 12:20 p.m.
10,000 people thank you.
Silly Sally
Wed, Sep 7, 2011 : 3:34 a.m.
Wow, cake for those at the top and crumbs for those on the bottom rungs of the corporate ladder. And it was the mismanagement of those at the top that caused this sad bankruptcy. Granted, many of these bad decision makers were fired long ago. Borders should be more generous to those hourly workers who are losing their jobs, too.
johnnya2
Wed, Sep 7, 2011 : 4:24 p.m.
Interesting that jinxplayer believes it was Amazon. Nicola bookstore still survives in Ann Arbor, B&Nobble still has stores all over the place. Maybe if Borders management had looked to the future instead of building internationally ( a major disaster), continuing to build when the sales per sq foot was plummeting, and then PARTNER with Amazon instead of selling books online themselves, the company might still be in existence. You can believe anything you want, but Borders shot themselves in the foot. I do not blame the most recent group running the place, but I would say the CEO can get the same severance package that the hourly workers get, one week for every year of service up to 12. Seems fair and rational instead of taking money that could go to CREDITORS who are OWED money.
jcj
Wed, Sep 7, 2011 : 12:35 p.m.
jinxplayer What put them under was greed at the top!
jinxplayer
Wed, Sep 7, 2011 : 11:26 a.m.
It was actually amazon.com that was responsible, but believe what you will.
Robot Charles
Wed, Sep 7, 2011 : 3:34 a.m.
They've done a really good job at running the company into the ground so they deserve at least $1.75 million.