The president of the union that represents most of Tops Markets workers is "disgusted" by the supermarket company's proposal to pay $3.6 million in bonuses and provide an ownership stake in the restructured company to its highest-ranking executives at a time when worker pensions are being cut.
"They're trying to cut corners. Hours are being cut. And at the same time, they're giving themselves bonuses," said Frank DeRiso, the president of the United Food and Commercial Workers union Local One, which represents nearly 90 percent of the bankrupt supermarket chain's workers.
The new plan, in addition to the $3.6 million in cash payments, also would grant the Top executives 10 percent of the stock in the newly reorganized company, divided among the participants. Those shares could be valuable if Tops successfully emerges from bankruptcy and becomes solidly profitable. But the shares also could turn out to be of little value if the restructured Tops struggles financially, burdened by annual interest payments of $55 million or more.
This is the second time that Tops has tried to reward its top executives with hefty bonuses. The company this spring proposed paying up to $3.6 million in bonuses to CEO Frank Curci and four other high-ranking executives during its bankruptcy case.
But that proposal drew opposition from Tops' unions, including the UFCW and the Teamsters union that represents workers at its warehouse. Tops agreed to drop the bonuses as part of a settlement with the Teamsters that resolved a major pension dispute.
The money that had been earmarked for the $3.6 million executive bonus plan instead was diverted to fund most of Tops' contribution to a new $15 million retirement fund that is being established for the warehouse workers. That new retirement fund will partially reimburse them for pension benefits they have not accrued since the pension dispute began in December 2013.
Exactly how much each executive would receive under the new bonus plan isn't disclosed in the Bankruptcy Court documents that outline the terms of the bonus plan. The documents also do not identify which executives will be eligible to receive bonuses under the new plan. In the initial plan, the bonuses were limited to Curci and four other high-ranking Tops executives.
The U.S. Trustee, a federal bankruptcy supervisor who monitors the administration of bankruptcy cases and their compliance with bankruptcy laws, objected to the latest bonus plan, calling it an "insider retention plan" that should be subject to the provisions of bankruptcy law.
But Tops' attorneys argue that the latest bonus plan isn't subject to the standards imposed under federal bankruptcy law because it is a "post-emergence incentive plan," with the bonuses being paid only after the company emerges from bankruptcy, possibly as early as November.
"It made me disgusted," DeRiso said of the latest bonus plan. "They haven't even emerged from bankruptcy and they're talking about incorporating this. I don't know how they can face our members. They're relying on these people to turn the company around."
DeRiso, however, said that the union plans to file documents in Bankruptcy Court charging that Tops has missed the deadline for making its August and September payments to worker 401(k) plans. Those missed payments, he noted, come at a time when the company is pushing ahead with its proposal to pay bonuses to its top management.
Tops said it expects to make the payments soon. “Tops has already made the initial $12 million-dollar payment to the UFCW fund,” the company said in a statement. “There are remaining administrative and technical issues for which we are working with the union and the advisors diligently on and should be resolved shortly.”