NEW YORK -- Kmart Corp. may be bankrupt, but it's got more than $20 million put aside for its top executives if they can meet certain performance objectives.
Kmart is seeking court approval to pay chief executive Charles Conaway up to $11.5 million and chairman James Adamson up to $7.5 million. Ronald Hutchinson, chief restructuring officer, will receive an annual base salary of $475,000, a lump sum payment of $250,000 and, if still employed when the company exits Chapter 11, an additional $1 million.
According to documents filed on Tuesday, the same day Kmart filed for Chapter 11, Conaway will be paid at least $1.5 million a year. Court papers were not immediately available. Pursuant to performance target goals established by the board, Conaway is eligible for annual target bonuses of at least 125 percent, or $1.875 million, of his annual salary.
Conaway's amended employment agreement, reached the night before the company filed for Chapter 11, ends on May 30, 2005, but is extended automatically for an additional year on May 30, 2004, and on each May 30 thereafter. If Conaway is still employed by Kmart on July 31, 2003, he is entitled to both a retention payment of $6.5 million and the forgiveness by Kmart of a $5 million loan that the discounter made to him, court documents said.
In other Chicago bankruptcy court matters, Kmart is seeking approval to enter into an employment agreement with Adamson, named chairman on Jan. 17, succeeding Conaway who retained the ceo post.
Under the terms of the agreement, which ends on April 30, 2004, or, if earlier, on the effective restructuring date of the bankrupt firm, Adamson receives a sign-on payment of $2.5 million and $1 million in fees. He is also entitled to receive $4 million if the company is successfully restructured by July 31, 2003, but the amount is decreased daily by $7,299 until it reaches $2 million if the success date is April 30, 2004. Should Kmart exit Chapter 11 after April 30, 2004, Adamson is not entitled to any success payment. Upon court approval, Kmart will establish a $10 million letter of credit to insure its payment to Adamson.Ronald Hutchinson, named chief restructuring officer on Jan. 22, will receive an annual base salary of $475,000, a lump sum payment of $250,000 and $1 million if he is still employed on the restructuring date.
Separately, Kmart said Friday that it has launched an internal investigation in response to a letter it received addressed to the Securities and Exchange Commission, Kmart's auditors and board. The letter, Kmart said, was referred to the audit committee of Kmart's board.
A spokesman for Kmart said that the company hired Skadden, Arps, Slate, Meagher & Flom, its longtime outside counsel, as legal adviser, and Deloitte & Touche as accounting consultant. The letter, which he described as "anonymous and unsigned," purported to be from employees of the retail chain. The spokesman added, "The letter was received over a week ago, is very vague and didn't contain many specifics."
The spokesman said Kmart contacted the SEC upon receipt of the letter, and was told last week that the SEC has authorized a private investigation of the matter.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye