Amid reports it is inching toward Chapter 11 bankruptcy, Ascena Retail Group revealed in a Securities and Exchange Commission filing today that it is restoring base pay for executives and implementing a retention plan.
The conglomerate — parent to Ann Taylor, Loft and Lane Bryant — said named executive officers who had their base pay reduced during the COVID-19 pandemic saw salaries restored as of June 21. Additionally, Ascena on June 17 implemented new retention and performance-based arrangements for its named executive officers as well as three other executives — which it says “will be instrumental in preserving” its workforce.
As retention bonuses, CEO Gary Muto and interim executive chair of the board Carrie Teffner each will immediately receive a cash payment of about $1.068 million. Executive vice president and chief financial officer Dan Lamadrid will be paid roughly $603,000, including $275,000 from an existing retention agreement. Additionally, long-term performance-based cash bonuses — which were meant to be paid out in either October 2020 and October 2021, subject to an executive’s continued employment — will be paid out earlier for eligible execs. Muto will receive over $1 million ($913,750 for fiscal 2018 and $100,000 for fiscal 2019) in long-term performance-base awards, while Lamadrid will be paid $72,250 for fiscal 2018 and $11,400 for fiscal 2019, a total of more than $83,000.
Ascena, which owns roughly 2,800 units across the country, temporarily closed almost its entire brick-and-mortar fleet in mid-March amid government-mandated lockdowns. In addition to reducing executive pay, Ascena implemented furloughs, cut back on advertising expenses, extended vendor payment terms and withheld rent on shuttered stores to preserve cash flow. Despite these steps, Ascena expressed concern in a May 26 SEC filing that a “material adverse impact” could come as the result of the coronavirus. Further, according to a Bloomberg report from earlier this month, the company is in talks with lenders and could file for Chapter 11 bankruptcy protection as soon as July.
Over the past couple months, some of the nation’s biggest chains — including J.Crew, Neiman Marcus and JCPenney — have filed for bankruptcy protection amid the COVID-19 crisis. And the bankruptcy woes do not appear to be over yet: New York & Co. parent RTW Retailwinds Inc. and Men’s Wearhouse owner Tailored Brands Inc. are both reported to be mulling Chapter 11.