The “war for talent” is real in American business. In these days of what’s known as full employment in the job market, finding and keeping talented people is a challenge.
As Tops Markets tries to navigate the rocky shoals of bankruptcy, the company needs to hang on to its management team. Its new plan to pay $3.6 million in bonuses to top executives is a reasonable and justifiable recognition of that fact. There is nothing unusual about it.
There was pushback among the rank and file when the company proposed similar bonuses earlier this year. Tops dropped that plan in June as part of settling a pension dispute involving workers at its Lancaster warehouse. Teamsters union units representing Tops warehouse workers and their pension fund objected to the bonuses being paid while the company was discussing store closures and trying to reduce its pension obligations.
The difference now is that the bonuses would be paid after the company is out of bankruptcy.
Also, the plan contains the equivalent of a performance incentive. It would grant the top executives 10 percent of the stock in the newly reorganized company, divided among the participants. If the company emerges from bankruptcy to become profitable, the stock shares could rise in value. If the company is unable to turn the corner, the shares would be worth little.
The $3.6 million in cash payments, however, are not linked to the financial performance of the company.
The bonus plan originally proposed was for the company’s top five executives, including CEO Frank Curci. The new plan, outlined in bankruptcy court filings doesn’t identify who would receive the bonuses.
A story in The News on Tuesday said Tops projects that it will lose around $13 million in 2019 and roughly break even in 2020 and 2021. If it’s not profitable, the company may be forced to borrow additional money to pay the bonuses.
Tops in February filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company has identified 10 supermarkets that are struggling financially and will close by the end of November – none in the Buffalo area.
The Wall Street Journal reported Tuesday that American employers had more than 7 million unfilled jobs this summer, a first. The historically tight labor market shows no signs of diminishing. Bonuses such as Tops plans are common for companies in crisis. The tight labor market only adds to the case.