BERLIN – As insolvency proceedings for German department store, catalogue and travel group Arcandor opened midday in Essen, a severance package of 15 million euros, or $21.45 million, for outgoing chief executive officer Karl-Gerhard Eick has provoked outrage in Germany.
Worker representatives said they were incensed by the amount, at a time when executive compensation is a hot-button topic in Europe. In an interview on German radio, Chancellor Angela Merkel said she did not agree with a manager receiving five year’s salary for six months work.
When Eick took over the group in March, he received a guarantee of the severance package from the private bank Sal. Oppenheim, one of Arcandor’s main shareholders.
The group employs over 38,000 employees, many of whom may be now threatened with redundancy. Last week, Arcandor AG announced it would let go a majority of staff at its primary holding company. The Essen-based firm has given close to two-thirds of its 100 holding company employees notice to leave their desks by the end of September.
Last month, Arcandor gave up all hope of finding a buyer to take on the entire group. Insolvency administrators can now continue the search for individual investors for the Karstadt department store chain and Quelle mail-order service, and say there’s a 90 percent chance the company could survive the restructuring process, which may include the closing of 19 Karstadt doors and the firing of a third of the Quelle staff.