The JC Penney Company is an institution in the United States, with hundreds of stores across the country selling everything from clothing and home furnishings to jewelry and cosmetics.
But JC Penney is in trouble. The coronavirus pandemic has brought the company to its knees financially, and after more than a century in business, the retail giant is teetering on the edge of bankruptcy.
Of course, JC Penney is far from being the only iconic American business pushed to the brink by the outbreak. From smaller mom-and-pop stores, to giants like Neiman Marcus and J. Crew, retailers across the country have seen their businesses decimated by the pandemic and the lockdowns instituted to try to contain it.
But JC Penney now faces outrage from its 90,000 employees, after it emerged recently that despite furloughing the vast majority of its workers, the company recently paid top executives millions of dollars in “please stay” bonuses – money that many feel should have been used to help stabilize the company or support its distressed employees. (Related: Massive wave of business defaults coming as some 47,000 retailers across country close and stop paying rent.)
A ‘retail apocalypse’
As reported by the Observer, retail sales in the United States experienced their greatest two-month decline in history in March and April, pushing many to the edge of bankruptcy.
JC Penney was facing chapter 11 bankruptcy after missing two repayments on its $4.3 billion debt, and though the company was able to make a single payment last week, its situation remains dire.
With bankruptcy looming and thousands of employees losing their jobs, it certainly seems strange that the company felt that this was a good time to hand out massive payouts to four of its top executives. (Related: JC Penney fires employee for revealing truth about deceptive pricing.)
CEO Jill Soltau received $4.5 million while chief financial officer Bill Wafford, chief merchant officer Michelle Wlazlo and chief human resources officer Brynn Evanson each got $1 million, the company disclosed in a May 10 regulatory filing. The payments are to ensure J.C. Penney can "retain and continue to motivate its named executive officers and other employees through the volatile and uncertain environment affecting the retail industry," according to the company.
The 118-year-old company is one of many retailers that was forced to temporarily close its stores as the coronavirus spread across the U.S. That has reportedly put J.C. Penney a step closer to bankruptcy, with the company missing two debt payments in April and May. Citing anonymous sources, Reuters reported that the company plans to file for Chapter 11 as soon as this week, permanently shuttering about a quarter of its 850 U.S. stores.
The company insists that the bonuses were necessary to keep the executives motivated, and notes that the payouts come with strings attached.
The terms of the agreement state that the executives will be required to repay 80 percent of the money if they resign or are “fired for cause” before the end of January next year. In addition, they will need to repay 20 percent if they do not meet certain specific performance goals.
The Observer reported further:
In addition, the executives were required to forfeit the right to all annual bonus plans and long-term incentive awards for the current fiscal year, as well as outstanding equity or options from past award plans.
Nonetheless, it is certainly easy to empathize with the feelings of angry employees who have lost their jobs, while the top brass – who let’s face it, clearly haven’t been doing a good job or the company would not be in distress – take home millions to “stay motivated.”
Learn more about the state of the American economy at Collapse.news.
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