Sears Canada’s plan to pay out millions in bonuses to keep executives and key staff on board while not paying severance to laid-off workers is being met with shock and disbelief.

“It definitely should not go to them,” said Marinella Gonzalez, who worked as a planner at the retailer’s head office for 18 years before getting laid off in June with no severance. “This situation happened because of mismanagement, and it should not be the workers that have to pay for that.”

Gonzalez said more needs to be done to protect and prioritize worker rights when companies get into trouble.

Read: Sears Canada agrees to continue special payments to DB plan, retiree benefits

“This is not the Canadian way. . . . To be treated in this way is absolutely unacceptable. I think our government needs to step in and these corporations need to smarten up.”

Ken Eady, who spent 30 years at Sears before retiring, said news of the bonuses while not paying severances was just the latest development in a terrible situation.

“To see people being paid what might be millions of dollars in bonuses for staying seems so out of balance and so unreasonable that it’s beyond the pale,” said Eady, who now works to protect the pensions of retired Sears employees at the independent SCRG retiree association.

Sears Canada got court permission on Thursday to pay $9.2 million in retention bonuses as part of a compromise with retired employees that will see the company continue making some benefit and pension payments until Sept. 30.

Read: Continued DB special payments would imperil Sears operations, CFO warns

The retailer had initially asked the court for permission to immediately halt payments for pension, health and dental benefits for laid off employees, retirees and surviving spouses due to a severe cash crunch.

Justice Glenn Hainey wrote in his approval of the $9.2 million in payments that the details should remain confidential. But the company estimated when it sought court protection in June that it would need to pay $7.6 million for key employees at head office and $1.6 million for managers of stores that are scheduled to be closed under the restructuring.

Sears Canada spokesman Joel Shaffer said the payments are common during the creditor protection process, and are designed to keep key employees motivated with performance indicators and incentives to successfully close stores.

He said the payments are designed to support the best possible outcome for the business and stakeholders, and that the situation could worsen without them.

Read: Sears faces $300M retirement benefit shortfall as retailer seeks CCAA protection

Along with approving the deal between the company and former employees, Hainey also gave Sears Canada the green light to immediately proceed with reaching out to potential buyers while it’s under court protection from its creditors.

Sears Canada shocked many employees when it announced in June that it planned to close 59 locations across the country and cut approximately 2,900 jobs, without severance, while under the Companies’ Creditors Arrangement Act.

Employment lawyer Susan Ursel, whose firm represents more than 17,000 non-unionized former and current employees, said Thursday they continue to push for temporary hardship fund for those who are in dire need of cash and health benefits.

Copyright © 2020 Transcontinental Media G.P. Originally published on

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There’s this prevailing belief that stay-puts of such magnitude for “key” peeps makes the difference between an orderly wind up and a chaotic one. That is certainly the case in some situations, but certainly not this one.

First, any retailing exec. recruiter worth his or her salt would find few top drawer execs. at Sears right now. They’ve already left. The Board’s flight-out paranoia is just that, meriting drug therapy, not the squandering of scarce cash.

Second, key people at the HO level have few options after Sears, and if they do, they will be at lower rates of pay; hence in most cases (not all), additional retention pay is a waste of other stakeholders’ money.

Third, if the Board is so weak or lacking in mental acuity (shall we say) that it can not distinguish between outcome-driven special payments and the minimum statutory payments to people who have to stay anyway just to stay on Sears’s (for that matter, anyone’s) payroll, perhaps their emoluments should be the next thing to go.

Fourth, how can any fair minded consumer now make purchases in a Sears store, knowing that the margin, their money is going to these payments.

Tuesday, July 18 at 1:45 pm | Reply

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