The Toys R Us Bankruptcy; It Just Gets Worse

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"One might think that owners KKR, Bain and Vornado wanted the same leadership team that had built the coffin to stay around to formerly bury it."

As time goes by, I have become increasingly angry at Toys R Us senior management for accepting $8.2 million dollars in bonuses while, in essence, helping to destroy a retail chain that was a part of the very fabric of the toy industry. But what really makes me mad is the fact that those top executives are receiving that $8.2 million while 30,000 loyal, hard working employees, many of them minimum wage workers, receive nothing. Some of these workers have been with the company for decades. It is truly shameful.

And let's not forget about the independent sales representatives who have lost their livelihoods as well as the many companies who will not receive payment for the toys that Toys R Us is now in the process of closing out.

One might think that owners KKR, Bain and Vornado wanted the same leadership team that had built the coffin to stay around to formerly bury it. Except even that isn't happening.

Here is how a May 11, 2018 New York Business Journal article by Anthony Noto puts it:

Toys 'R' Us execs reportedly to exit retailer early", David Brandon, "the CEO, who drew the ire of a bankruptcy trustee when he received a $2.8 million retention bonus just days before the company filed for Chapter 11 protection, is expected to leave the company Monday." The article goes on to state: "…chief financial officer Michael Short, general counsel James Young and controller Charles Knight are expected to leave before July.

There is something terribly wrong about all of this. Consider that back in September of 2017, The Street ran this article: "Toys 'R' Us Store Employees Set for Higher Wages Despite Bankruptcy". That, of course, never happened, and in retrospect it seems a bit contrived. Was Toys R Us trying to get hourly workers to stay with the company by promising a wage increase that, at least in retrospect, seems impossible for them to have serviced? 

Toys R Us employees are now running a petition called "Toys "R" Us: Employees Deserve Severance Pay". They are attempting to secure 75,000 signatures and to date they have secured 53,882.

As they put it on their website: 

Tens of thousands of us are losing our jobs while Bain Capital, KKR, and Vornado received $470 million in fees and interest from their investment. Just days before filing for Chapter 11 bankruptcy protection last September, five of the top Toys "R" Us executives received $8.2 million in retention bonuses.[1] CEO David Brandon received $2.8 million and asked for court approval of up to another $12 million in incentive bonuses.[2]

We’re calling on Bain, KKR, and Vornado to take the $470 million they received in interest and fees and pay out a $15,000 severance pay to the 30,000+ Toy R Us workers who are losing our jobs.

 I signed the petition.

8 thoughts

  1. Well said, I agree that this is bad behavior sanctioned by the court and so sad for the thousands of employees left out in the cold

  2. Thanks Richard! Also, just signed and shared with our team. The only way to push back against this type of BS is to ensure that we shed an extremely bright light on it, in effect, crowd-sourcing the outrage at what is going on.
    Again – thanks again for your efforts.

  3. Every time I get an annual meeting announcement from a corporation whose stock I own in my retirement account, I submit a proxy vote against the executive compensation plan, regardless of what the plan contains. Chances are it is distorted and inexcusable, at the expense of shareholders as well as other employees. If more shareholders were to do the same, perhaps management would get the message: we are truly disgusted by executive greed.

  4. Yet another example of payment for failure.
    All too common in US Toy Companies ( not exclusively) Need to take a hard look at Comp Committees.

  5. Just more corporate greed at work here, don’t see why anyone is surprised by this. It’s despicable & disgusting, and has been the norm for the past 20 years or so.

  6. Respectfully, I don’t know ANYONE besides the judge who approved the payout, who actually thought the execs would stay. In certain cases in the past, TRU would pay moving expenses for an employee, when this happened they would require the employee to sign an agrement that if they left TRU before 12 months had passed they would need to pay back the moving expenses. How is it that retention bonuses werre paid without signed contracts requiring those who received the bonuses to stay?

  7. TRU employees are victims of egregious mismanagement by “money guys” with no real interest in learning the toy business. With the demise of TRU on has to wonder what the future holds for the toy industry, As a 30+ year veteran of the toy industry I’m saddened by where I see the industry is headed.

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