The Washington Post had a piece over the weekend about how Toys R Us workers, faced with unemployment as the retailer folds, are challenging the way in which company execs are treating them.
Here’s how the Post frames the story:
“Toys R Us isn’t paying severance to its 30,000 workers who will lose their jobs as the retailer shuts down, even though it doled out millions in executive bonuses a week before it filed for bankruptcy. Now, some workers are calling on lawmakers to create new rules that would require bankrupt companies backed by private-equity firms to provide compensation to their workers.
“On Friday, more than a dozen workers met with lawmakers in New Jersey, where Toys R Us is based, to push for severance pay. Workers also called for new regulations on leveraged buyouts, as well as windfall taxes that would prevent private-equity firms from running a business into the ground and then walking away with huge sums of money.
“In addition to meeting with lawmakers, employees are preparing to file a claim in bankruptcy court next week asking that they be fairly compensated, according to workers’ advocates at the Center for Popular Democracy.”
The story goes on:
“Last year, Toys R Us awarded executives $8 million in bonuses a week before filing for bankruptcy. A few months later, the company got approval from a bankruptcy judge to pay up to $21 million in additional bonuses to executives if they met certain performance goals. (That money was never awarded because the company’s performance fell short.) Chief executive Dave Brandon received $11.25 million in compensation last year.
“Toys R Us is one of dozens of retailers backed by private equity to file for bankruptcy since last year, as heavy debt loads and increased competition take their toll on the industry. Others that have filed for bankruptcy following leveraged buyouts include Nine West, Claire’s, Gymboree, True Religion and Payless Shoe Source.”
Here’s how the Post frames the story:
“Toys R Us isn’t paying severance to its 30,000 workers who will lose their jobs as the retailer shuts down, even though it doled out millions in executive bonuses a week before it filed for bankruptcy. Now, some workers are calling on lawmakers to create new rules that would require bankrupt companies backed by private-equity firms to provide compensation to their workers.
“On Friday, more than a dozen workers met with lawmakers in New Jersey, where Toys R Us is based, to push for severance pay. Workers also called for new regulations on leveraged buyouts, as well as windfall taxes that would prevent private-equity firms from running a business into the ground and then walking away with huge sums of money.
“In addition to meeting with lawmakers, employees are preparing to file a claim in bankruptcy court next week asking that they be fairly compensated, according to workers’ advocates at the Center for Popular Democracy.”
The story goes on:
“Last year, Toys R Us awarded executives $8 million in bonuses a week before filing for bankruptcy. A few months later, the company got approval from a bankruptcy judge to pay up to $21 million in additional bonuses to executives if they met certain performance goals. (That money was never awarded because the company’s performance fell short.) Chief executive Dave Brandon received $11.25 million in compensation last year.
“Toys R Us is one of dozens of retailers backed by private equity to file for bankruptcy since last year, as heavy debt loads and increased competition take their toll on the industry. Others that have filed for bankruptcy following leveraged buyouts include Nine West, Claire’s, Gymboree, True Religion and Payless Shoe Source.”
- KC's View:
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I’m pretty sure that nothing the Toys R Us execs and the private equity folks did was illegal - not because I’m any sort of legal scholar, but because these things happen all the time. I’m pretty sure, however, that what they did was look out for themselves and not for the people who they employed. Does that make them immoral and unethical? It does in my book … but I’m not sure that this is the basis for a legal action or any sort of legislative remedy.
