(CBS NEWS) – J.C. Penney is giving millions of dollars in pay bonuses to top executives as the ailing department store chain reportedly teeters on the edge of bankruptcy.
CEO Jill Soltau received $4.5 million while chief financial officer Bill Wafford, chief merchant officer Michelle Wlazlo and chief human resources officer Brynn Evanson each got $1 million, the company disclosed in a May 10 regulatory filing. The payments are to ensure J.C. Penney can “retain and continue to motivate its named executive officers and other employees through the volatile and uncertain environment affecting the retail industry,” according to the company.
The 118-year-old company is one of many retailers that was forced to temporarily close its stores as the coronavirus spread across the U.S. That has reportedly put J.C. Penney a step closer to bankruptcy, with the company missing two debt payments in April and May. Citing anonymous sources, Reuters reported that the company plans to file for Chapter 11 as soon as this week, permanently shuttering about a quarter of its 850 U.S. stores.
J.C. Penney, which has 90,000 employees, would join Neiman Marcus and J. Crew among the retailers to go bankrupt since the virus struck. In its most recent quarter J.C. Penney’s sales fell nearly 8%, to $3.4 billion, from the year-ago period, while income was $27 million, down from $75 million a year ago.
Although the pandemic has further dented J.C. Penney, it has been declining for years amid the growth in e-commerce and weighed down by $4 billion in debt. It has closed numerous stores in recent years to cut costs.
Companies facing possible bankruptcy often pay so-called retention bonuses to top executives. Businesses say the payments encourage corporate leaders to remain on board as companies restructure during the process and, if possible, exit court supervision as stronger competitors. J.C. Penney executives must return 80% of the bonuses if they resign before January 31 of next year.
J.C. Penney said maintaining its leadership will be critical to the company’s future and that its compensation to executives is “in line with those of other companies in similar situations.”