Proposed salary for Kmart top executive at least $1 million

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Posted 7:57AM on Friday, April 5, 2002

DETROIT - Kmart Corp.'s top executive will receive at least $1 million a year in base salary plus an extra $4 million if he brings the troubled company out of bankruptcy by July 2003, according to an employment agreement filed in U.S. Bankruptcy Court. The agreement, filed Wednesday, is subject to court approval. It states chief executive and chairman James Adamson would get the full $4 million bonus if the company emerges from Chapter 11 by July 31, 2003. The bonus decreases by $7,299 for each additional day the company is in bankruptcy until April 30, 2004, when he would get no bonus. Adamson also gets a $2.5 million signing bonus and a $1.25 million performance bonus under the agreement. The Troy-based retailer also asked the court for permission to pay Jay Alix & Associates a $500,000 retainer fee and .75 percent of its annual earnings before interest, taxes, depreciation and amortization. Jay Alix is supplying two of Kmart's top executives: the company's chief financial officer, Albert A. Koch, and treasurer Ted Stenger. Under that agreement, Kmart would pay $640 an hour for Koch and $620 an hour for Stenger. Translated into 40-hour weeks, 52 weeks a year, the company would pay $1.3 million for Koch and $1.29 million for Stenger. U.S. Bankruptcy Judge Susan Pierson Sonderby in Chicago is to address the agreements in an April 23 hearing. Kmart filed for Chapter 11 bankruptcy protection Jan. 22 following lower-than-expected holiday sales and a stock dive. Last month, it announced it will close more than 280 stores, eliminating 22,000 jobs. Kmart also announced Thursday that it has reached an agreement to retain DJM Asset Management LLC and its marketing partner, ChainLinks Retail Advisors Inc., to assist in marketing the leases for the 283 Kmart stores that are closing. That agreement also is subject to court approval. Kmart stock closed down 6 cents at $1.37 Thursday on the New York Stock Exchange.