More than a dozen companies that have filed for bankruptcy during the pandemic have committed to paying millions in bonuses to their executives as many Americans are jobless, Bloomberg News reported.
Of the about 100 major companies that have filed for bankruptcy since the beginning of the coronavirus pandemic, 19 of them have committed to paying a total of $131 million in retention and performance bonuses, both before and after filing for bankruptcy, according to Bloomberg’s analysis.
The bonuses were confirmed to executives weeks and sometimes days before the bankruptcies, according to the analysis of regulatory filings. Creditors cannot stop payouts unless they are made after the company enters bankruptcy court.
The U.S. Trustee within the Department of Justice can question payments made after a company files for bankruptcy, but for those made before, the process is costly and lengthy. The Trustee has challenged about a dozen bonuses it labeled as excessive in recent weeks but is usually unsuccessful, Peter Carr, a spokesperson for the agency, told Bloomberg.
The firms say they aim to keep their executives in order to come back from the pandemic’s economic downturn.
Bloomberg notes that the actions aren’t new, but in the midst of a pandemic where a record number of Americans are losing their jobs, “the context is unprecedented.”
J.C. Penney’s has already confirmed to give $4.5 million to Chief Executive Officer Jill Soltau, who took her position in 2018 as the company already faced economic decline. A total of $10 million was awarded to executives, Bloomberg reported. J.C. Penney declined to comment to The Hill.
Rental company Hertz committed to giving $1.5 million to three top executives three days before filing for bankruptcy in May. The company said it had to slash 10,000 jobs in North America due to the pandemic.
Frontier Communications Corp., a telecom company, announced bonuses in February before filing for bankruptcy in April, Bloomberg reported. Frontier declined to comment to The Hill.
Chesapeake Energy said in May that it would give $25 million in bonuses to 21 executives, but they would be required to pay it back “if certain conditions are not satisfied.” At the time, the company also cut executive pay and created a retention program for employees to receive retention payments, before seeking bankruptcy in late June.
The company declined to comment to The Hill.
The CEO of satellite company Intelsat SA Stephen Spengler is expected to receive a $6.9 million bonus out of an incentive program, although the Justice Department disagrees with the program, according to Bloomberg.
Intelsat SA declined to comment to The Hill.