When the Key Employee Incentive Plan, or KEIP, was approved in April, it was intended to encourage Borders’s senior management to stay on and either reorganize Borders or sell it as a going concern. Since that didn’t happen, the company is back in court to request a bonus package for management, which totals $1.75 million. The severance provides for $125,000 for fifteen management employees, including former CEO Mike Edwards and former CFO Scott Henry who were both terminated on July 29.
In a filing in support of the payments, Borders president Holly Felder Etlin, managing director of AlixPartners, writes that “in coordinating an expeditious and orderly liquidation, Mr. [Jim} Freering, Ms. [Rosalind] Thompson, and the Non-Insider Management Employees remaining with the company are working tirelessly for the benefit of all creditors, yet are currently working themselves out of a job upon completion of the task.” She also praises Edwards and Henry for working “long, hard and to the absolute best of their abilities for the Debtors.”
While Borders is looking to reward management for its tireless efforts, rank-and-file Borders employees, who were part of a mass layoff at the company’s headquarters in Ann Arbor, have issued a class action lawsuit to obtain their severance pay. On Friday, Jared Pinsker, who was terminated on July 23, filed for 60 days of unpaid wages and benefits under WARN, the Worker Adjustment and Retraining Notification Act of 1988, for himself and 300 other employees.
Both issues will likely be taken up at this week’s hearing on Thursday.