DETROIT - Kmart Corp. has asked a federal bankruptcy judge to approve a $1.5 million annual base salary for chief executive and chairman James B. Adamson. <br>
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The bankrupt retailer earlier proposed paying Adamson $1 million a year. But in its motion filed Friday night with U.S. Bankruptcy Court in Chicago, Kmart said Adamson's ``wealth of experience in both retailing and restructurings'' justified paying him the higher amount. <br>
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Attorneys for Troy-based Kmart told Chief Bankruptcy Judge Susan Pierson Sonderby that they would present the revised proposal for Adamson's compensation on April 23 or April 24. <br>
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In addition to the $1.5 million salary, the new proposal would give Adamson a bonus equal to 125 percent of his base salary upon Kmart's emergence from Chapter 11 bankruptcy. He could receive a smaller or larger bonus, depending on the achievement of performance goals. <br>
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The motion also asked to give Adamson to a ``success payment'' to be determined by the development and execution of Kmart's reorganization plan. The payment would be made by Kmart's unsecured creditors as a combination of cash, Kmart stock or other Kmart securities. <br>
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Additionally, the retailer wants to pay for Adamson's salary, bonuses, incentives, benefits and perks with a $10 million letter of credit pending bankruptcy court approval of the revised employment agreement. The letter of credit in effect guarantees that Adamson will be compensated as promised, regardless of how Kmart fares in the future. <br>
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Kmart filed for protection from creditors under Chapter 11 bankruptcy protection Jan. 22 after disappointing holiday sales and a stock dive. Adamson had been named chairman five days earlier. <br>
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Adamson became CEO March 11 after Chuck Conaway resigned March 9. Adamson has been a member of Kmart's board since 1996. He is not receiving an additional salary as CEO. <br>
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On April 3, Kmart submitted an employment agreement under which Adamson would get at least $1 million a year in base salary; a $2.5 million signing bonus; an estimated $1.25 million annual performance bonus; and an extra $4 million if he brought the retailer out of bankruptcy by July 31, 2003. <br>
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The retailer withdrew that motion two days later ``in order to facilitate negotiations'' with creditors. Kmart spokespersons did not return telephone calls seeking comment on the amended compensation package for Adamson. <br>
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The revised package is ``now supported'' by Kmart's creditors, company lawyers said in their latest filing.
