Fresh out of creditor protection, retailer Reitmans paid the equivalent of $2.3 million in bonuses to its senior executives, employees and directors who remained loyal to it through two difficult years.
Posted at 3:03 p.m.
The company disclosed this information in regulatory filings delivered to its shareholders at the end of May. “The precise amount allocated to each beneficiary varied according to their seniority, the position they held and the perceived extent of their contribution during the procedure. [de restructuration] “, can we read in the circular.
Of that amount, the company’s five most senior executives shared $580,000, of which $200,000 went to President and CEO Stephen Reitmans. Seven directors each received $25,000, for a total of $175,000.
Shaken by health restrictions, Reitmans filed for protection under the Companies’ Creditors Arrangement Act (CCAA) in May 2020. The company emerged from restructuring proceedings last January, on the strength of support 98% of creditors to its plan of arrangement.
Granting bonuses once you leave the protection of your creditors is normal practice, says the president and CEO of the Institute for the governance of private and public organizations (IGOPP), François Dauphin.
We want to reward people who did not leave the ship while the ship was sinking. It’s fair game, to some extent, to thank the people who helped keep the ship afloat and weather the storm.
François Dauphin, President and CEO of the Institute for the Governance of Private and Public Organizations
Michel Magnan, governance expert and professor at Concordia University, agrees. “This practice of paying a lump sum bonus is relatively common in the context of a successful exit from a restructuring process,” he wrote in an email.
When a company finds itself in a precarious financial situation, certain key employees may have given up components of their remuneration that they could have obtained in normal times. “Some employees were able to make sacrifices,” says Mr. Dauphin.
Despite the difficulties the retail sector has experienced during the pandemic, the industry must also deal with the scarcity of workers, he explains. “In this sense, I believe that there are several factors which militate in favor of this practice. »
The bonus could even be in the interest of certain creditors who gain from the company restarting on solid foundations, adds the compensation expert.
Mr. Dauphin considers the amounts in question to be reasonable. He notes that two-thirds of the $2.3 million awarded were to middle managers and employees.
Pay up
Total compensation for Reitmans’ top five executives rose 35% to $2.57 million for fiscal 2022 (ended Jan. 29, 2022), according to the company’s circular.
Chairman and CEO Stephen Reitmans, who is also the founder’s grandson, saw his total compensation soar 30% to $1.07 million.
Last April, the company decided to renew the compensation program in the form of stock options. The 2.05 million options granted have an exercise price of $1.50 and will expire on May 26, 2025.
For the options to enrich the executives to whom they are granted, the share price must exceed the exercise price of $1.50 before their expiration. In the afternoon, the share price was $1.11, down 4 cents, or 3.48%, on the Toronto Stock Exchange.