This audio is automatically generated. Please let us know if you have any feedback.
Big Lots has agreed to pay retention bonuses to keep four top executives on board as the retailer navigates a prolonged period of operational and financial uncertainty.
The company’s board of directors approved one-time cash payments totaling approximately $5.2 million for senior executives on August 12, according to a filing with the U.S. Securities and Exchange Commission (SEC) earlier this month.
Chief Executive Officer Bruce Thorn was awarded $3.15 million, Chief Financial Officer Jonathan Ramsden was offered $969,938, and Ronald Robins Jr., the company’s chief legal and governance officer who also serves as general counsel and corporate secretary, and Michael Schlonsky, chief human resources officer, were each offered $561,058.
“Paying these types of bonuses can be another signal that the company will enter bankruptcy in the near future,” said Sarah Foss, global head of legal and restructuring at Debtwire, in an email comment to Retail Dive. “They want to make sure that their key executives stay with the company during a Chapter 11 proceeding and they don’t have to fight over the payment of the bonuses during the proceeding itself.”
The retention agreements require each senior executive to repay the money if he leave the Company voluntarily within 12 months of signing the Agreement, except in the case of termination without cause or termination by the Company for good cause.
Thorn has been CEO and a board member since 2018. Ramsden was appointed to his position in 2019. Schlonsky has been with the company for over 30 years, joining as a human resources consultant in 1993. And Robins became Big Lots’ general counsel and corporate secretary in 2015. Big Lots did not immediately respond to Retail Dive’s request for comment on whether each person signed the agreement.
The retailer began cost-cutting measures last summer. Last August concluded a sale-leaseback of 22 stores and a distribution center in California. In April, the retailer took out another $200 million loan, partly through a Mortgage on the company’s registered office in Columbus, Ohio, and liens on most of Big Lots’ working capital and personal property.
Then, in June, Big Lots issued a warning about the company’s continued existenceand said it would be unable to meet its credit and loan obligations in the near future. Finally, earlier this month, the company secured amended credit and loan terms that allow it to Closure of up to 315 poorly performing branchesmore than double the 150 allowed in an earlier agreement. The company had nearly 1,400 stores in June.
Big Lots’ value proposition is focused on closeouts, liquidations and overstocks. However, if the company cannot find a buyer or lender willing to pump additional liquidity into the company, Big Lots could itself go bankrupt, according to Debtwire’s Foss, following a similar path to Only 99 cent stores and furniture and Home Decor Retailer Conn’s.
“Discount chains like Big Lots have struggled with a difficult retail environment this year. Lumber Liquidators, Bob’s Stores, Joann and The RoomPlace Furniture and Mattress have also filed for Chapter 11 bankruptcy this year,” Foss said in an emailed comment. Big lots First quarter net sales fell 10.2% to $1 billiona decrease from the previous year’s $1.1 billion, while comparable sales declined nearly 10% year-over-year.
