Borders wants bankruptcy court to approve up to $8.3 million in executive bonuses
Ann Arbor-based Borders Group Inc. is seeking permission to pay out up to $8.3 million in bonuses to its top executives if they are able to help the company survive bankruptcy.
Employees at Borders' headquarters in Ann Arbor have not received pay raises in four years.
File photo
The court papers also reveal that Borders has not given raises to the corporate employees at its Ann Arbor headquarters in four years.
The bonuses would be split into two segments: up to $7.1 million for 17 of the company's top executives and $1.2 million for 25 other "director-level" employees. The bonus for Mike Edwards, CEO of Borders Group subsidiary Borders Inc., could be as much as $1.68 million. The company's executive vice presidents could get up to $1.08 million.
The bonuses would be distributed if Borders:
• Can convince the bankruptcy judge to approve a reorganization plan that involves the company's survival. For the top executives, the bonuses are also tied to the company's ability to get the plan approved within five months of its submission.
or
• Successfully attracts a buyer that would continue to operate the company.
"No amounts will be paid if the debtors confirm a plan of liquidation or consummate a sale to liquidators," the compensation consultant said.
The consultant said Mercer conducted an analysis of comparable bankruptcy scenarios and determined that the proposed bonuses were reasonable.
Companies that have filed for bankruptcy argue that executive bonuses are reasonable because a sudden leadership exodus could hurt the company's chances of survival.
Borders filed for Chapter 11 bankruptcy protection on Feb. 16 and is in the midst of closing 226 superstores, including the store on Washtenaw Avenue in Arborland Center. The company employs about 500 workers at its headquarters in Ann Arbor.
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
Fred Steadman
Mon, Mar 28, 2011 : 8:09 a.m.
Hey!!!! I have an Idea! our furor Snyder could appoint these anointed execs as heads of failing townships... They could then get MORE BONUSES for that!
transplant
Sun, Mar 27, 2011 : 5:09 p.m.
This is mind-boggling. It's beyond mind-boggling! This money should go to the employees who are losing their jobs because of poor management decisions. What is WITH some of these people?
Nikki River
Sun, Mar 27, 2011 : 2:30 p.m.
We would not allow this at a "public" institution. When are people going to realize that there is no "public" money and "private" money. Whether tax-supported or privately held, wasteful spending always ends up coming out of the pockets of you and me - either through higher prices or lost jobs or any of a million other ways these costs "trickle down" into our lives.
talker
Sun, Mar 27, 2011 : 3:40 a.m.
This reminds me of when Michigan based K-Mart filed for bankruptcy.. Executives received millions of dollars while long term rank and file employees lost their jobs and retirement accounts. I recall reading how some former employees were confused when K-Mart (since acquired by and part of Sears Holdings, I think) re-issued new stock, but the old stock was worthless. Those former K-Mart employees didn't understand it. That could be how corporations can go bankrupt, yet reward top executives. Doing so seems so preposterous that most people don't believe such a thing can happen. Borders employees shouldn't get any bonuses of size even if they save the business (a smaller version). Paying reasonable salaries for workers who try to save Borders is the way to do it. There's plenty of "talent" available that beats out the non-talent of those who drove Borders into the ground over many years. Those who would share in over $8 million of bonuses don't have any super-human abilities or they would have done their magic over the past few months. Without super-human abilities, executives trying to save a vastly downsized company while being relieved of financial obligations deserve salaries not bonuses.
Tru2Blu76
Sun, Mar 27, 2011 : 3:23 a.m.
If divided equally, the $7.1 million going to the top 17 execs would give each around $417,000. If the lower 25 share equally in the ("puny") $1.2 million bonus cash pool, each will get $48,000. I know a lot of people who've never earned $48,000 in one year - let alone getting a bonus that size. I'm dying to know how giving away $417,000 to 17 individuals makes any kind of sense. That's over 10 times the median U.S. yearly income: over 10 years income for millions of hard working wage EARNERS. Proof positive that right wing crazies are already running this country.
Tru2Blu76
Sun, Mar 27, 2011 : 2:54 a.m.
Most of us know, this particular story is but a small part of a much bigger story: the one about the destruction of the American Middle Class. One good place to start looking for the rest of the story is with Bob Herbert's latest (and last) column in the N.Y. Times. Mr. Herbert's "Losing Our Way" is here: <a href="http://www.nytimes.com/2011/03/26/opinion/26herbert.html?_r=1&src=me&ref=general" rel='nofollow'>http://www.nytimes.com/2011/03/26/opinion/26herbert.html?_r=1&src=me&ref=general</a>
say it plain
Sun, Mar 27, 2011 : 4:29 a.m.
That was a sad and powerful final column, sigh...
Tru2Blu76
Sun, Mar 27, 2011 : 2:43 a.m.
Okay - enough of this GAME! Lets see the list of (names withheld) company officer who are "sharing" this bonus, with each officer's title, show their regular compensation amounts for the last four years. Here we have a failing company - the people in charge can legitimately be called failures. Yet I'll be they all got a nice compensation package when hired and continued to collect while Border's was dying. Now - they want to get bonuses too!!?? What a "variance" from the (dreck) free market propagandists: who always say we are each on our own and should only be rewarded for successes. Show us - where the successes have been among this group! When the free market propagandists lie (as above) to protect the system, it can only mean they have no intention of reforming the system. I call on our Republican legislature and Republican governor to prove me (us) wrong: Enact a measure mandating denial of bonuses for executives in failing companies. You can then call yourselves honest - and institute an INCENTIVE to do things right, too.
Barry
Sun, Mar 27, 2011 : 2 a.m.
While I disagree with paying out millions of dollars to top executives and other "director-level" employees, it appears that the procedures are "generally in line with market standards and practice" according to the paperwork filed by John Dempsey. This situation presents a unique career opportunity for anyone willing to put ethics aside in the name of greed. What do you want to be when you grow up? A Corporate Cowboy, of course. Sign on for an executive or director-level position with a corporation on the brink of bankruptcy, wring hands for a few years in order to give the appearance of a corporate conscience, ride the company to its demise, hire a compensation services consultant, file the correct paperwork, convince a judge to approve a reorganization plan and collect a couple million dollars (maybe more). Do this two or three times in less than 15 years, retire a millionaire. Seems like the Corporate Cowboy career is the fast track to financial freedom. What was I thinking? Work 30 or 40 years and maybe retire? Boy, do I feel dumb.
Lovelace
Sat, Mar 26, 2011 : 10:39 p.m.
From the Publisher's Weekly article (sic): "Borders's noted that 70% of the 17 top employees have been with the retailer for less than 18 months." Actually, 70% of their top employees have been laid off in the last 4 years. If by top you mean best, not overpaid category managers. <a href="http://www.publishersweekly.com/pw/home/index.html" rel='nofollow'>http://www.publishersweekly.com/pw/home/index.html</a>
CPS
Sat, Mar 26, 2011 : 5:24 p.m.
Wow. Where do I sign up? How do I get a cushy job like this? I'm absolutely POSITIVE that if you put me in charge of a multi-million dollar company that I too could successfully run it into bankruptcy. I think that if these bonuses go to the executives, then their home addresses (for ALL their properties) should be posted as well so that the company employees who are losing their jobs will know where to apply for assistance. Seriously, why reward executives whose results are bad? By rewarding them if they succeed OR fail, you remove the incentive to ENSURE SUCCESS for the company. Unfortunately, this is not just a Borders issue....
Mickey
Sat, Mar 26, 2011 : 5:23 p.m.
I think they should tax the teachers to pay for the bonuses
Mick52
Sat, Mar 26, 2011 : 4:46 p.m.
Perhaps Borders should just dissolve into the sunset. I fear that bookstores will go the way of video and record stores. With websites like Amazon selling cheaper books and the new ability to download books on your iPad, Kindle, eBook, Librie, Iliad, etc., soon there will little reason to have a bookstore. Unfortunately that will put more people out of work in all the various industries that produce books but that is what has happened for many jobs. Technology is making many jobs disappear. Heck these days I am buying a song all by myself. No one knows I purchase a song, just some computer somewhere. And I never get a "Thank you for shopping with us."
1bit
Sun, Mar 27, 2011 : 12:15 p.m.
I'd be fine with that if Amazon paid sales taxes or provided lists of purchases to the State of Michigan so that sales taxes could be collected. Amazon currently has a 6% price advantage because most people do not pay their sales taxes.
Tom Joad
Sat, Mar 26, 2011 : 3:20 p.m.
Borders, I smite thee with my credit card as I push the Amazon buy button.
Kai Petainen
Sat, Mar 26, 2011 : 2:42 p.m.
when companies fail and people still walk away with millions.... it gives me a disturbing comfort that we can tell our children that they too can fail and make money off the misfortunes of others. once they get that bonus, keep an eye on which ones walk away to other companies (if they haven't done so already)
Mick52
Sat, Mar 26, 2011 : 4:48 p.m.
I do agree with you but the story says right up front they will get the bonuses if they can get the company through bankruptcy which would require the company survive, not fail. No millions to walk away with if the store fails.
Kai Petainen
Sat, Mar 26, 2011 : 2:24 p.m.
about 5-6 years ago before the collapse, the insiders made a bit of money as they sold some shares. and they sold the shares just before they had a negative EPS announcement & before/after the paperchase deal. here's a little piece i helped with: <a href="http://blogs.forbes.com/schifrin/2011/02/18/did-insider-selling-foretell-borders-demise/" rel='nofollow'>http://blogs.forbes.com/schifrin/2011/02/18/did-insider-selling-foretell-borders-demise/</a> if the company goes public again... watch it during their first year and see if any insiders sell any stock... if they do, that will be disturbing once again. management should not allow any insider selling, so as to create confidence in the company, and reassure shareholders that management is acting in the best interest of the shareholders/workers/ann arbor/etc.
1bit
Sun, Mar 27, 2011 : 2:08 a.m.
I agree - ultimately rewarding employees with deferred stock options and other measures to insure that they stay 'loyal' to the company makes the most sense to me rather than a simple cash payment.
Kai Petainen
Sun, Mar 27, 2011 : 1:50 a.m.
i want borders to do well, and i do wish it the best. it is an ann arbor entity and i want it to survive. my concern is that it will be a temporary fix, that will meet the needs of the few and not the needs of the many. previously, the insiders sold shares and then negative news started happening. if they fix things and they get a bunch of $$, and then they get shares on top of that, only to repeat mistakes and sell their shares and walk away... then that will be distasteful. but if the company recovers, and does well... then by all means... give them a bonus that makes sense -- but wait for a few years until it is obvious that they are doing well. then, provide a just reward.
1bit
Sun, Mar 27, 2011 : 12:49 a.m.
Kai: If these "insiders" actually rescue the company to the extent that it can go public again and new shares are offered, then they will deserve whatever they get. Odds are that the point is moot as Borders' business model is probably a failed enterprise at this point.
Kai Petainen
Sat, Mar 26, 2011 : 6:45 p.m.
Yes, and once the insiders get the new shares.... wait and see if they sell those and/or walk away.
1bit
Sat, Mar 26, 2011 : 5:16 p.m.
Kai: Borders shares (past and present) are now effectively worthless. Coming out of bankruptcy would create new shares and the old ones from the "insiders" are worthless.
jns131
Sat, Mar 26, 2011 : 2:05 p.m.
Wasn't there another company that tried this? O wait, wasn't it the executives at Ford Chrysler and one other? I say nope. The execs needs to give up something as well. No wonder Borders under, the execs have eaten away at all the profit and revenue. I say no to the extra money. Do what they did to the executives, make them drive and give up their planes.
Richard Tyler
Sat, Mar 26, 2011 : 12:59 p.m.
OK, Let me make sure I understand this. These are the same executives that made the decisions that led to the bankruptcy in the first place. They have no money to pay their landlords (or other creditors), they've thrown hundreds of people out of jobs and they think they are entitled to huge bonuses. I'll never shop at Border's again !!
1bit
Sun, Mar 27, 2011 : 12:47 a.m.
Actually, it's not quite like that. Borders' problems arise from being slow to anticipate and react to the marketplace. They did not have an electronic bookstore early enough and did not have an electronic reader early enough. They also have been paying sales taxes on purchases making them more expensive than Amazon.
walker101
Sat, Mar 26, 2011 : 12:55 p.m.
Rewarding incompetence, how nice?
pbehjatnia
Sat, Mar 26, 2011 : 12:52 p.m.
LM_O!!!!! Have these people been reading the headlines the last couple of years? These people ran this company which is now in bankruptcy. Why on Earth would you pay them bonuses?
Wolf's Bane
Sat, Mar 26, 2011 : 12:40 p.m.
I'm going to Border's this afternoon to take a giant dump in their toilet and not flush... I'm SO steamed!!!!
Wolf's Bane
Sat, Mar 26, 2011 : 12:37 p.m.
Can't you just picture Border's top brass singing this son right about now? Mercedes Benz By Janis Joplin ------------- Oh lord won't you buy me a Mercedes Benz. My friends all drive porsches, I must make amends. Worked hard all my lifetime, no help from my friends. So oh lord won't you buy me a Mercedes Benz Oh lord won't you buy me a color TV. Dialing for dollars is trying to find me. I wait for delivery each day until 3. So oh lord won't you buy me a color TV. Oh lord won't you buy me a night on the town. I'm counting on you lord, please don't let me down. Prove that you love me and buy the next round. Oh lord won't you buy me a night on the town. Oh lord won't you buy me a Mercedes Benz My friends all drive porsches, I must make amends. Worked hard all my lifetime, no help from my friends. So oh lord won't you buy me a Mercedes Benz Good luck, you sniffling good for nuth'ins.
snoopdog
Sat, Mar 26, 2011 : 12:37 p.m.
This is ludicrous and disgusting, I am done shopping at Borders. Anyone up for a boycott at their corp office ? Good Day
jns131
Sat, Mar 26, 2011 : 2:10 p.m.
I'm in. Although I couldn't when it came time to drive my ford and chrysler car. I haven't been to Borders since I saw that line. I hate to say it though, the employees will get their 26 weeks....o wait, 20 weeks since Snyder is stealing the other 6 weeks to pay for the Granhom mess. Sad sad sad.
Use Logic
Sat, Mar 26, 2011 : 1:43 p.m.
Remember that the people that have the most to lose from a boycott aren't the C- and E-level executives - they can bounce back rather easily. Look at the last 3 CEOs. No, the people who will suffer the most are the still well over 500 people at the HQ. Can Ann Arbor absorb another 500 job losses, another vacant office building, and dozens of home foreclosures? Keep this in mind as the decision to boycott is considered.
bobr
Sat, Mar 26, 2011 : 12:27 p.m.
I hope the reporter follows up on the story as it goes along
grye
Sat, Mar 26, 2011 : 12:21 p.m.
This is a perfect example of corporate arrogance. They should be lucky to just have a job after the bankruptcy is completed.
Carole
Sat, Mar 26, 2011 : 12:16 p.m.
No, no, and no. Just like when they bailed out the banks/mortgage companies -- the CEO and Big Boys all received enormous bonuses. If they could not come up with a plan to save the company in the past, what makes you think they will do so in the future. They will take the $$$ and enjoy themselves. To my way of thinking, any funds available should go to those ladies and gentlemen who have been working their tails off in the store trying to keep the business a'float. Truly, I do not understand, in the past when a company went broke, it just went under and unfortunately "oh well".
Jaime
Sat, Mar 26, 2011 : 12:08 p.m.
It makes a lot of sense to give bonuses to people whose misguided leadership drove the company to where it is today. NOT!!!!! Bonuses should only be paid out for long term performance.
rinmem10
Sat, Mar 26, 2011 : 11:57 a.m.
Now that took a serious set of testes. If they could save the company from bankruptcy, why didn't they just prevent it to begin with?
McGiver
Sat, Mar 26, 2011 : 11:27 a.m.
Why would they want to retain that kind of talent. Typical public corporation behavior.
towny
Sat, Mar 26, 2011 : 11:25 a.m.
If they give one penny I personally will never go into one of there stores again. You can close them all.
Wolf's Bane
Sat, Mar 26, 2011 : 12:38 p.m.
why ever bother? I get all my books on iTunes and Amazon. If I need something in hurry, I go to B & N.
Arieswoman
Sat, Mar 26, 2011 : 10:07 a.m.
What a joke! This is just disgraceful. I went to the Washtenaw Borders closing sale. What a joke. Only 20% on books? Come on! Give me Amazon any time for good prices! Any way I love my Kindle.
1bit
Sat, Mar 26, 2011 : 5:13 p.m.
Don't forget to pay your State sales taxes on your Amazon purchases. I'm sure you are reporting it, just like everyone else.
A2comments
Sat, Mar 26, 2011 : 11:45 a.m.
The liquidation is run by a 3rd party who makes more if they charge more...
Audion Man
Sat, Mar 26, 2011 : 4:09 a.m.
Business decisions like this are precisely why all government services need to be privatized. This is the sort of business acumen that we need to apply to law enforcement, fire fighting and other government services.
Audion Man
Sat, Mar 26, 2011 : 11:47 p.m.
It seems to me that a key part of Capitalism has been lost... customers. It isn't about supply meeting demand, with customers creating demand and businesses supplying it. It seems only to be about rewarding executives and mollifying shareholders. Customers are almost irrelevant.
mw
Sat, Mar 26, 2011 : 5:51 p.m.
"Such companies as AIG, ENRON, Bank of America,? All poorly run companies that are still around, and paying huge bonuses to execs." Actually, Enron is not still around (except to finish liquidating): <a href="http://www.enron.com/" rel='nofollow'>http://www.enron.com/</a> The others? That's the problem with a government that's too big and too involved in managing the economy (aka providing sweet deals to cronies) -- it doesn't let companies fail when they should.
clownfish
Sat, Mar 26, 2011 : 4:36 p.m.
mw at 11:48 AM --- Such companies as AIG, ENRON, Bank of America,? All poorly run companies that are still around, and paying huge bonuses to execs.
mw
Sat, Mar 26, 2011 : 3:48 p.m.
When a corporation is badly run or market conditions change, what happens? It goes out of business, and is replaced by something better. What happens when, say, a school systems is badly run, year-after-year, decade-after-decade? Does it go out of business and get replaced by a better-run competitor? Competitor? What's a competitor?
Cash
Sat, Mar 26, 2011 : 11:33 a.m.
LOL Yes, that would be special. And even better if they could sell the names...like the AAFD would become Target Firefighters!
Use Logic
Sat, Mar 26, 2011 : 3:59 a.m.
I agree with the sentiment of most of the posters, that giving these huge bonuses to these executives is completely wrong. Even a disproportionately small bonus for the beaten-down-yet-hopeful employees would help make this situation less absurd. To be fair though, most of the executives have only been with the company a short time (less than 18 months), and it's a huge stretch to say that they ran the company into the ground - the long-term, high rent leases that were drowning the company in red ink were signed 5-15 years ago,or 3-4 management regimes ago. But they are hardly deserving of their already high salaries, let alone another 8 million dollars.
Stephen Landes
Sat, Mar 26, 2011 : 3:19 a.m.
I don't understand bonuses for people who have been hired to get Borders out of trouble. If they stay with the company after it exits bankruptcy and if they achieve a profit, then I would consider bonuses. I had the same problem with "retention bonuses" paid at Ford when I worked there: if we have to pay for your loyalty then we do not need you. Bonuses are for people who have actually accomplished something more than the base expectation with the emphasis on "accomplish".
Moscow On The Huron
Sat, Mar 26, 2011 : 2:41 a.m.
How about you save the company first and then ask for a bonus?
Wolf's Bane
Sat, Mar 26, 2011 : 12:39 p.m.
Too late, silly. This is what's called begging for the golden parachute.
Kai Petainen
Sat, Mar 26, 2011 : 2:20 a.m.
oh wait... i think Barnes Noble has more debt than cash. nevermind. not to mention, Barnes Noble has taken a dive lately, it's close to an all time low of $9 or so i think, the bad news with borders, has made others wonder about barnes/noble? the biggest asset with the bookstores, might not be in the books, but in the real estate?
mw
Sat, Mar 26, 2011 : 3:45 p.m.
Exactly. The leases that Borders has are some of the biggest liabilities it has (which it hopes to get out of in the bankruptcy process). The landlords are going to get back big-box stores that are hard to rent right now (see, for example, the Circuit City store still sitting empty just down from the Arborland Borders).
CynicA2
Sat, Mar 26, 2011 : 5:13 a.m.
Most of the real estate, if not all of it, is leased, at above market rates. Whoops!
snapshot
Sat, Mar 26, 2011 : 2:18 a.m.
They aren't getting bailed out with tax dollars. The tax "change" won't benefit Borders as it hasn't been in place but a couple of weeks. GM employees are getting bonuses and taxpayers still own 30% of the company. What about Chrysler, they got tax dollars and they were a private equity firm, not a public company. they're getting bonusses too and taxpayers still own about 50% of them I think. Feel free to correct me if I'm wrong...Fiat owns 50% or so I'm thinking taxpayers own the rest.
Kai Petainen
Sat, Mar 26, 2011 : 2:08 a.m.
"Successfully attracts a buyer that would continue to operate the company." Should Barnes & Noble and Borders merge?
macjont
Sat, Mar 26, 2011 : 1:19 a.m.
I am in the process of taking inventory of my books on a new program, "Delicious Library 2." I am at 4350 books and counting. A very large percentage of those books have been purchased from Borders (others at B&N and Nicola's, as I like to keep my business local and to spread it around). If the proposed bonuses are paid, Borders may have seen the last of my business. Don't pay the people who serve me coffee, stock your shelves, and handle the cash registers peanuts and then pay your executives outlandish bonuses. Borders may not miss my business, but I am sure B&N, Nicola's and Amazon will welcome it.
say it plain
Sat, Mar 26, 2011 : 1:09 a.m.
Isn't this whole obscenity about stock-holders and wall street types? I mean, I'm sure the high-level employees would argue that they bring 'value' worth many multiple times these bonuses if they were to somehow allow stockholders to lose less money, or even *make* some with some key trading positions, probably helped along by winkwink 'info' from these various executives as they move along with the bankruptcy process. Find a buyer, stop the stock price freefall, etc....isn't that worth many millions to the only people in this economy who truly count?! All of us *not* playing in that rarified air of upper echelon business are only fodder for the games, and whenever we peep about how it seems unfair we get told such talk is socialism, or class warfare, and we swallow. Why doesn't the judge call their proposal blackmail? Because that's what it is essentially! You want us to make it so that Borders survives?! Well, you'd better pay up then, or else, what's our motivation?! How about your current huge salaries! Why do they have to imagine the even greater riches ahead of them for doing what they've been hired to do?! And what in heck is a "compensation services" firm but an agent serving to keep CEO salaries obscene for no other reason than 'precedent'? They are like the blackmail-letter writers to tell boards and courts why it is absolutely necessary to pay these 'leaders' ridiculous sums, ever more ridiculous in comparison to the rank and file employees. It creates a system whereby CEOs care about nothing but short-term profit and golden parachutes. We're fine with that, apparently, but consider unions fighting for the living wages--all of which get put right back in the economy for others to benefit from, unlike the 3rd and 4th and 15th million per year of CEO salaries!--to be acting like mobsters lol. How bizarre we are.
auntiemmmm
Sat, Mar 26, 2011 : 12:54 a.m.
Oh, get out! Who do they think they are, AIG?
Fat Bill
Sat, Mar 26, 2011 : 12:09 a.m.
Are you telling me that these executives are in such demand that other companies will simply snatch them up? How about doing a job because you receive a salary to do the job? If the company survives and makes money again, then you become a hot commodity and then perhaps more money might be somewhat justified.
1bit
Sat, Mar 26, 2011 : 5:11 p.m.
True, or maybe they should be seeking stock options instead rather than cash.
Will
Fri, Mar 25, 2011 : 11:54 p.m.
Perhaps the whole State problem really does boil down to "expectations." Top executatives expect to receive multi-million dollar bonuses for their work; whereas, experienced, competent governmental workers and teachers didn't.
Mike D.
Fri, Mar 25, 2011 : 11:15 p.m.
It would seem that the overwhelming majority of commenters here have never worked for a large company. If Borders is going to survive, it's going to need a strong executive team, and competent, experienced executives expect to be compensated for their work. You can blame the executive team for the position Borders is in, but the reality is that the folks who made terrible decisions ten years ago by ignoring the internet are long gone. I wouldn't take an executive level position at a company in Borders's position unless there were the expectation of a meaningful payoff if I succeeded. Would you?
Woman in Ypsilanti
Sat, Mar 26, 2011 : 3:23 p.m.
Any executive who can't see what a public relations nightmare this would be doesn't deserve a bonus. I can understand that some of them may want to leave for greener pastures but since I have worked for large companies I know that there usually are many competent people in any company who will stay and work without a cash bonus. And aren't people who really care about a firm the ones most likely to take the kind of long term view that can result in a company that will still be around in several years? I am not against bonuses for executives but they should be tied to performance and not outrageously big. Stock options that vest in five years would be acceptable to the public I am sure. This notion that a firm can't get good executives for less than millions of dollars is simply not true. I have never noticed a substantial difference in compensation between executives who make millions and those who earn a couple of hundred thousand. Not to mention what an amazing opportunity this is for any executive who stays. Any executive who stays and who can make Borders survive will most likely be hugely rewarded in the future because they will have proven themselves in one of the most difficult of circumstances. I suspect that they are asking for these bonuses because they know there isn't any hope for Borders and they want to get what they can while they can.
Mike D.
Sat, Mar 26, 2011 : 2:13 p.m.
Cash, who is "they?" The executives who presided over this mess no longer work for the company. Their current CEO is at least the 4th in the past couple of years. Is that kind of revolving door any way to save a company? Penalizing new executives brought in to fix this mess for the sins of their predecessors is irrational.
Gorc
Sat, Mar 26, 2011 : 1:41 p.m.
dillymay101 - upper management won't share the wealth because they know it's easier and less expenses to replace front line staff who is paid hourly.
dillymay101
Sat, Mar 26, 2011 : 12:17 a.m.
What about strong, competent employees who aren't executives? Is it fair to reward executives who are new to the company but to not even provide a small increase in salary to good employees who have been with the company for years? I'm thinking that a company wants a strong team, not just strong top leaders. If an organization doesn't take reward good employees the good employees don't stay. Really, it has been years since employees were given any kind of salary increase. Years.
macjont
Fri, Mar 25, 2011 : 11:54 p.m.
No other country in the world has its executive compensation so out of line with the wages of the rank and file. A trend that has this country in danger of becoming a 3rd world country. It's time we stopped, and it's time we stopped rationalizing this outrageous practice.
Cash
Fri, Mar 25, 2011 : 11:40 p.m.
They already drove the company into the ground. Take a clue from Japan and show some PRIDE in their WORK. Inept shortsighted people drove the company into bankruptcy. They should have pride and fix the mess that they created.
Kcin
Fri, Mar 25, 2011 : 10:52 p.m.
"The bonuses would be distributed if Borders: • Can convince the bankruptcy judge to approve a reorganization plan that involves the company's survival. For the top executives, the bonuses are also tied to the company's ability to get the plan approved within five months of its submission. or • Successfully attracts a buyer that would continue to operate the company. "No amounts will be paid if the debtors confirm a plan of liquidation or consummate a sale to liquidators," the compensation consultant said." Maybe if people read, let it sink in, took a deep breath, then commented, a a dot com wouldn't be in such rough shape.
Edward R Murrow's Ghost
Sun, Mar 27, 2011 : 3:07 p.m.
1bit, I understand that EXACTLY. And, if they have $8 million to pay in bonuses upon exiting bankruptcy, they have $8 million to pay vendors, lessors, and employees. We are entering a new Gilded Age where not only do such outrageous things happen, but where a large segment of the public are apparently OK with this outrageous behavior. And I guess that probably explains the Lady Gaga phenomenon, too. Good Night and Good Luck
1bit
Sat, Mar 26, 2011 : 5:08 p.m.
No, ERMG, they have to exit bankruptcy first. This means reworking arrangements with creditors. If the creditors don't like it then the company liquidates and no bonuses are paid.
Edward R Murrow's Ghost
Sat, Mar 26, 2011 : 12:47 p.m.
I read the article and it sunk in. A company that is in bankruptcy, that is laying off or has laid off thousands, that is using bankruptcy to vitiate its contracts with landlords (which is putting many of them in bankruptcy) and to void its debts with suppliers--that company proposes paying 8 million to its executives before it pays its debts? Outrageous. Good Night and Good Luck
macjont
Fri, Mar 25, 2011 : 11:54 p.m.
No other country in the world has its executive compensation so out of line with the wages of the rank and file. A trend that has this country in danger of becoming a 3rd world country. It's time we stopped, and it's time we stopped rationalizing this outrageous practice.
a2idealist
Fri, Mar 25, 2011 : 10:50 p.m.
First, I think there nothing wrong with rewarding employees for success. And the executives (and everyone else) working at Borders right now are facing a very daunting task. If they are successful in turning the company around and making Borders stable and profitable corporation, why should they not be rewarded? It is our entire community who will benefit. A financial reward should be part of a compensation incentive. However, the dollar values being quoted in this article are grotesquely out of proportion with income levels for even those who would be considered very wealthy members of our community. I am curious to learn just how executive compensation in general has gotten so out of control. The small businesses and non-profits in our area struggle to get by with less and less these days, and I can imagine what a huge impact $8.3 million dollars could have here - on schools, basic needs, help for the many families affected by layoffs and foreclosures, and the arts. I am a loyal Borders customer, and believed that I was making a difference by choosing a locally-based company instead of finding items cheaper at Amazon.com. But why should customers here continue to patronize a business whose values are so out of line with our own community? I would be very impressed to see the leadership at Borders publicly decline these outrageous bonuses and make a plan for investing those funds in their employees and their community. Just think of the customer loyalty that could be inspired.
1bit
Sat, Mar 26, 2011 : 5:06 p.m.
Cash: Reread the article - the bonuses are only paid if the company is saved. Success will be rewarded, not failure.
A2comments
Sat, Mar 26, 2011 : 11:41 a.m.
The leadership came up with the bonuses...
Cash
Sat, Mar 26, 2011 : 12:12 a.m.
Pride should be the only driving force. Look at how many people are out of work. Why should they be any different? The company FAILED. That failure ruined a lot of people's lives. Paying someone outrageous amounts of money to do ANYTHING is insane.
BookGirl
Fri, Mar 25, 2011 : 11:39 p.m.
@Cash, that is actually not true. The leadership at Borders today IS NOT the same leadership that "drove the company into the ground." These guys are all fairly new to Borders. The road to bankruptcy was being paved long before they took charge.
Cash
Fri, Mar 25, 2011 : 10:56 p.m.
Remember these are the people who drove the company into the ground in the first place.
CynicA2
Fri, Mar 25, 2011 : 10:47 p.m.
Wheeeeeewww!! Takes my breath away! Not surprising, though, in the new gilded-age of corporate cluelessness! I hope the judge decrees that the executives be sauteed with fava beans, and served with a nice chianti - perhaps at a farewell buffet for all the non-executive employees about to lose their jobs. The 8.3 million could be divided equitably among them as severance pay. Eat the rich!
charles mancherian
Fri, Mar 25, 2011 : 10:31 p.m.
My Plan: Pay the employees back pay; pay the stock holders what they had invested in the company; and give the 42 executives a boot out the door with nothing but a jail sentence for destroying a great company that was so badly mismanaged.
John B.
Fri, Mar 25, 2011 : 10:13 p.m.
It's all so sad and bizarre.... No wonder the Borders brothers don't want anything to do with what is going on at their namesake business now.
cinnabar7071
Fri, Mar 25, 2011 : 10:09 p.m.
Criminal charges yes! Bonuses no!
Will
Fri, Mar 25, 2011 : 9:57 p.m.
Borders can serve a great purpose here. It could become the poster child for Snyder's reinvent Michigan plan! "Bring your businesses to Michigan! Large tax breaks for businesses with few regulations!"
macjont
Fri, Mar 25, 2011 : 9:43 p.m.
I bought two books at Borders today. Those two books may be the last purchases I make from that company. After Snyder taxes my pension, I won't have enough money to buy their books anyway. That's it: raise my taxes so you can give businesses, including Borders, a tax break so ....... they can pay it out as bonuses to their incompetent executives. God Almighty! We've completely lost it.
bunnyabbot
Fri, Mar 25, 2011 : 9:22 p.m.
and I must say, that 33% off Borders coupon that rotates at the top of the page will REALLY go over well attached to this story. (shakes head) oh, that silly annarbor.com ad placement torture continues!
Moscow On The Huron
Sat, Mar 26, 2011 : 2:39 a.m.
Psst... Try the Adblock add-on for FireFox.
bunnyabbot
Fri, Mar 25, 2011 : 9:18 p.m.
disgusting. Drive a company into the ground and get a bonus, nevermind all those property owners who will lose thier shirts thanks to borders being able to get out of their leases. IF this is not a reason to not buy from borders ever again I don;'t know what is.
Are you serious?
Fri, Mar 25, 2011 : 9:16 p.m.
To paraphrase Capt.Renault in Casablanca - "I'm shocked, shocked to find that business executives could propose taking millions of dollars for running a company into the ground." Or perhaps a better quote would be from Yakov Smirnoff "What a country!"
northside
Fri, Mar 25, 2011 : 8:57 p.m.
This perfectly summarizes what's going on in the country!
Linda Peck
Fri, Mar 25, 2011 : 8:55 p.m.
At our expense? Sure, do we just love this? Hardly. I have read the comments - no one is saying this is a good idea. What is wrong with this system? Let business succeed or fail on its own steam, no bail outs, no bonuses. That is how I do business. No one picks up my losses or pays me a bonus for failing.
RTFM
Fri, Mar 25, 2011 : 8:54 p.m.
Dear Borders Executive, The authorization of $8.3 million in executive bonuses will be in the form of Borders Gift Cards. Thanks again for your commitment and enjoy! Board of Directors
A2comments
Fri, Mar 25, 2011 : 11:41 p.m.
Perfect!
timjbd
Fri, Mar 25, 2011 : 8:46 p.m.
All that's left is to devise a plan to stick the taxpayers with the bill for these bonuses. Just like at Lehman Brothers and AIG. Senior pensioners and school kids? They need a haircut..
Will
Fri, Mar 25, 2011 : 8:33 p.m.
Isn't it comforting to everyone to have tax breaks going to businesses that will create more jobs in our state so that businesses are free to keep the workers from receiving raises for years while the top brass rake in the millions! We don't want to burden businesses with regulation.
dillymay101
Fri, Mar 25, 2011 : 8:33 p.m.
It might be the norm, but it isn't right. Most employees at Borders haven't had a raise in 3+ years. Also, a few execs who seemingly left voluntarily? Most folks believe they were asked to resign.
Yooper
Fri, Mar 25, 2011 : 8:29 p.m.
So NOW they have some brilliant plan to save the company? Wasn't it their job to lead the company SUCCESSFULLY in the first place?? Sick of paying taxes to support big shots who don't do their job in the first place!!
Cash
Fri, Mar 25, 2011 : 8:29 p.m.
And they deserve a tax cut so they can...er.... hire a few clerks at minimum wage? This is where those tax cuts will go...the rich get richer and we pay for it in increased taxes.
Jay Thomas
Fri, Mar 25, 2011 : 8:27 p.m.
If they survive bankruptcy their reward should be having a job at all. Things just get more stupid here all the time.
JSA
Fri, Mar 25, 2011 : 8:24 p.m.
This is ridiculous. The only thing deserve is a competency hearing for even making such a suggestion.
Bill
Fri, Mar 25, 2011 : 8:24 p.m.
Perhaps fire the CEO and his executives who failed to make the changes to the business in order to prevent Chapter 11.
Tom Joad
Fri, Mar 25, 2011 : 8:17 p.m.
Borders, what a joke. Rewarding top brass for failure..typically American. ONE WORD: AMAZON.COM
Mick52
Sat, Mar 26, 2011 : 4:35 p.m.
If you read the article....it says they are asking for the bonuses if the company survives bankruptcy. I am not in support of these bonuses. Any money should be pumped into keeping the company afloat, though I doubt bookstores will be around much longer with Amazon and these electronic books that allow downloading books to a hand held reader.
Bababooey
Fri, Mar 25, 2011 : 8:16 p.m.
Shameful.
hypsi
Fri, Mar 25, 2011 : 8:16 p.m.
Agree with Ghost. This is just insane, what sane people ruin a company and then ask for a bonus? 8.3 million would go a long way to help compensate those employees that were let go, who are now struggling to find jobs. Crazy, just plain crazy. Maybe all of those science fiction books about corporates taking over the government and controlling people is coming true...oh wait Snyder is trying to do just that...sigh.
eagleman
Thu, Mar 31, 2011 : 11:19 p.m.
Please. Without corporations and business you don't have schools, hospitals, universities, or any other public service. Reviling what permits us to rail anonymously on a website is moronic. I suggest you take off the shackles of ideology and think about where the wealth you enjoy the benefit from originates.
nowayjose
Fri, Mar 25, 2011 : 8:13 p.m.
Why wouldn't we reward failure. Sounds Like a no brainer. Well deserved
a2phiggy
Fri, Mar 25, 2011 : 8:09 p.m.
How about giving bonuses to the staff members at surviving Borders who work their tails off retaining what customer base is left? Insane. Simply insane.
David Briegel
Fri, Mar 25, 2011 : 8:07 p.m.
Couldn't they hire an immigrant to bankrupt the company for a lot less? I'll bet if they let people compete for the job they could find a low bidder! Ghost, isn't it a shame they have to pay tax at all? Exxon and GE don't! And how many of their employees are barely above minimum wage?
Rod Johnson
Sat, Mar 26, 2011 : 3:30 a.m.
Awesome comment, David.
Forever27
Fri, Mar 25, 2011 : 7:56 p.m.
well, the status quo according to Wall Street is to do just that. Burn a company to the ground, you get a multi-million dollar bonus for your troubles.
Edward R Murrow's Ghost
Fri, Mar 25, 2011 : 7:49 p.m.
Seriously? Maybe if the governor gave 'em an even bigger tax cut they could get an even larger bonus? Good Night and Good Luck
1bit
Sat, Mar 26, 2011 : 5:03 p.m.
Pithy comment, but the bonus is only paid if they actually save the company. If they can do that, and that's a big if, then the money is probably well spent. My guess is the judge approves the plan.