J. C. Penney Company Inc. has approved bonuses of $1 million or more to four of its top executives just days before a potential bankruptcy filing.
In a filing with the Securities and Exchange Commission over the weekend, the ailing retailer announced that it had granted a cash award worth $4.5 million to CEO Jill Soltau, while CFO Bill Wafford, chief merchant Michelle Wlazlo and chief human resources officer Brynn Evanson each received $1 million.
The bonuses are subject to repayment if the executive is terminated or resigns before January next year and if certain performance goals are not achieved. (The repaid funds will then be used to pay severance to employees who did not receive cash awards.) In exchange for the bonuses, the executives are giving up their previously granted equity — worth more than $10 million for Soltau alone.
According to the company, the additional compensation was offered in order to retain top talent as JCPenney navigates its turnaround plan amid the coronavirus pandemic.
“Maintaining continuity of leadership is and will continue to be critical to the future of our company’s long-term success,” a spokesperson told FN. “Our compensation program is in line with those of other companies in similar situations and is aligned with milestone-based performance goals to continue incentivizing our team to drive results.”
The filing came just days before a possible Chapter 11 filing from JCPenney: The Plano, Texas-based chain has until tomorrow to make a roughly $12 million interest payment that it failed to pay its lenders last month. It also skipped out on another $17 million payment that was due last Thursday.
If it’s unable to make those payments within the relevant grace periods, the department store would effectively go into default, and its lenders could request the full payment of money owed before it’s due.
As of February, JCPenney had $386 million in cash on hand, plus the roughly $1.25 billion it tapped from its $2.35 billion revolving credit line two months ago. A bankruptcy filing could give the company the opportunity to save money on imminent debt payments and rework some of its finances.