Circuit City cuts board members and more executives

[Robbien]

Source: Times Dispatch

Circuit City Stores Inc. is cutting its remaining staff even deeper as it winds down operations.

The Henrico County-based company, which closed the last of its remaining 567 stores March 8 and is in the process of going dark, said in a Securities and Exchange Commission filing that it had cut eight of its 13 board members as well as three of its senior executives.

The executives are set to leave tomorrow. The board members left March 11.

As the fired executives prepare to leave, another waive of employees will depart today.

Circuit City spokesman Bill Cimino said last night that about 160 employees remained at the company's Mayland Drive headquarters. He was not sure how many would leave today, but said after this exodus, and a second one the middle of next month, there would be fewer than 100 employees left.

As the company continues to wind down its operations, it will keep five directors on the board and will retain two top executives: James A. Marcum, vice chairman, acting president and CEO; and Michelle O. Mosier, vice president and controller.

Read more: http://www.timesdispatch.com/rtd/news/local/article/B-CIRCGAT20_20090319-191202/236214/

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When a company goes bankrupt and closes its doors one would expect that execs and BoD are cut loose.

A few execs perhaps are needed to close the books. But Board Members? Five board members (probably paid at least half mil a year) are kept on in this case. What the heck are they directing? Making sure the payment of their BoD checks perhaps?

Of the execs the article states

Earlier this month, a bankruptcy judge allowed Circuit City to pay more than 150 top executives, managers and other employees up to $4 million in retention bonuses.

Retention bonuses?

Go figure

[LakeSamish706]

1. Here we go again huh... WTF is wrong with our country and it's method of doing business? n/t

[onenote]

6. how would you manage a company that is liquidating and going out of business

I'm curious. If you were in charge of a company that was liquidating and going out of business, how would you ensure that you actually had employees around to finish the job so that it doesn't end in chaos and an even messier situation for the creditors?

[Deja Q]

9. The mess is bought and paid for by the liquidators, perhaps?

See, it's always someone else's problem. Labor is a sin; ours is a country more about "management".

Like subcontracting. Subcontractors often subcontract, and those subcontractors subcontract too.

So when something does go wrong, everyone points fingers and nobody knows who is ultimately responsible. A mess indeed. Very neat and tidy, ironically.

[closeupready]

16. I know someone who works/worked for them.

it's like this - some people have already been let go, but he was told that he had to remain through March, or else they would challenge his unemployment. Not fair, but perhaps that means they let the most incompetent employees go first?

[napi21]

2. I don't understand the board members either. The controller, yes!

Maybe the President & one VP or Assistant, and of course one gofor. I don't understand the rest of them at all.

[onenote]

7. for one thing, the company by-laws and articles may specify a minimum number of directors

A few other points. The directors include both employees of the company and some non-employee "outside" director. In many instances, an employee director receives no additional compensation for serving as a director. The outside directors are compensated, often in the form of a combination of stock and cash. In the case of Circuit City, a google search indicates that their outside directors received $60K a year in cash for their service and another $100K in stock, which of course turned out to be worthless.

Believe me, the lawyers working on the CC bankruptcy earned more than the departing directors did in a week.

[No Elephants]

10. Boards have to authorize certain actions. Sometimes, it's a requirement of state law. Others,

a requirement of the Articles of Incorporation or bylaws of the corporation. Banks have some requirements, too. Maybe even insurance contracts have some requirements to that effect.

[burning rain]

3. What was it, a couple years back...

that they canned a lot of hourly employees and then magnanimously allowed them to reapply at lower wage rates? Oh yeah, jungle capitalism for the employees, the maximum compassion possible for the higher-ups. The parasites don't like dog-eat-dog capitalism so well when they're the ones subject to it.

[Double T]

4. Must have been ANAL retention bonuses.

Management destroys the company and is rewarded for the same. The american corporate business model is totally corrupt.

[onenote]

5. Absolutely standard procedure

in any large corporate bankruptcy. There are any number of issues that have to be decided as a company winds down. There are legal obligations to be fulfilled, etc. Someone has to make them and by law that someone is the board of directors. And retention "bonuses" are necessary in order to ensure that as a company winds down, it has sufficient staff to complete the job. Otherwise, given that they have no future with the company, folks would leave and no one would come on board to replace them. $4 million in bonuses spread over 150 employees works out to less than $27,000K per employee, which isn't peanuts, but not exactly a solid retirement.

[lostnfound]

8. In this economy where are they going to go?

[Gin]

11. wow...a google search indicates that their outside directors received $60K a year in cash

a person could make a nice living just by being on a BOD or 2 or 3...no wonder they all approve top salaries and perks...wouldn't want to bite the hand that feeds them!

[dysfunctional press]

12. that's nothing new, and not even a dirty little secret...

lots of people with fairly famous names "sit" on multiple b.o.d.'s, and pull down BIG bucks for what amounts to VERY LITTLE actual work.

and i don't think that they like having their boats rocked- so we should probably just let the issue go...:shrug: right?

[mbperrin]

17. There are liquidation firms in the world who work off a commission or percentage

of what they get for the bits and pieces of companies.

Really is no reason to think that incompetents who put a company out of business are any better at tying up loose ends, and by typing compensation to a percentage of recovery, recovery is maximized.

Enough coddling idiots who have the right parentage or connections and know nothing about business!

[Thor_MN]

13. "Retention Bonus" = being rewarded to stick around to clean up the mess you created

I know 4 years olds that know they are responsible for the messes they make, why is it that executives that don't know as much as 4 year olds need to be paid multi-millions?

[sarcasmo]

14. Why would a Bankrupt company even worry about Retention?

[onenote]

15. because a bankrupt company needs staff to wind down its operations

In order to keep employees from bailing out it, its standard op procedure -- and has been for a long time -- for the bankruptcy trustee to approve retention payments to keep employees on board as the company liquidates and winds down. Otherwise, there would be chaos, to the detriment of the creditors.