The coronavirus recession is pushing many companies into bankruptcy, a painful process that has led to layoffs, wiped out some investors and hurt the economy.Companies that are struggling to pay creditors and suppliers are managing to find millions of dollars to pay bonuses to their bosses. The payments, which are made just before a bankruptcy filing, appear to be legal and have been made by several companies.
But critics counter that the money would be better spent on rank-and-file employees. “It makes me angry because they are not taking care of the people who are actually making the money,” said Liz Marin, who worked at Toys R Us when it filed for bankruptcy and is now an organizer in training at United for Respect, a nonprofit organization that seeks to help retail workers. Toys R Us paid bonuses to executives before its bankruptcy.
As a result, boards have quickly changed how top officers get paid, giving them cash bonuses instead of stock-based awards. But paying cash upfront can be a windfall for chief executives at a time when the livelihood of employees are under threat. Some companies don’t even try to argue that executive pay was cut. At $6.4 million, the cash bonus paid to Whiting Petroleum’s chief executive, Bradley J. Holly, is larger than the $5.5 million at which the company valued his total compensation for 2019.
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