Bankruptcy court approves incentive payment package
The 'stay-put' bonus plan includes $125,000 to be disbursed to rank-and-file employees who exhibit 'extraordinary service.'
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- Phar-Mor's financial woes will mean fatter wallets for 15 high-level managers and 200 pharmacists -- as long as they stick with the company.
Judge William Bodoh of U.S. Bankruptcy Court in Youngstown approved a $1.6 million retention incentive payment package for employees Tuesday, including a discretionary fund to be used to reward lower level workers.
Phar-Mor sought permission for what it calls "stay-put bonuses" to encourage key employees to remain on the payroll while it works its way through a Chapter 11 bankruptcy case.
Under the plan: The bonus plan provides:
UFor Phar-Mor pharmacists, $5,000 bonuses, to be paid March 15.
UFor 15 second-tier managers, cash bonuses ranging from $7,546 to $73,125. Payments will be made in two parts, one-third payable Dec. 15 and the remaining two-thirds payable when Phar-Mor emerges from bankruptcy or is sold to a new owner.
UA $125,000 discretionary employee bonus fund, to be used to reward rank-and-file employees for outstanding or extraordinary service.
Michael Gallo, a Phar-Mor attorney, said pharmacists are in short supply nationwide, and the struggling discount drugstore's pharmacists are being recruited daily by competitors. Officials proposed the bonus program, which will cost about $1 million, to encourage its pharmacists to stay.
The 15 managers singled out for cash bonuses are considered "key employees" whose services are essential for continued operations. Base salaries for those key employees range from $31,391 to $195,000, Gallo said.
Finally, the discretionary fund will be disbursed by managers to Phar-Mor's employees at its 74 stores, its Tamco distribution center in Austintown and its administrative headquarters in Youngstown.
Judge Bodoh postponed discussing retention bonuses for the discount drug chain's top five executives until Dec. 11. Gallo said details of those agreements are still being negotiated.
Top executives: John Ficarro, Phar-Mor's senior vice president and chief administrative officer, explained that the bankruptcy filing requires the company to negotiate new compensation contracts with its top executives: Ficarro; Abbey J. Butler and Melvyn Estrun, co-chief executives; David Schwartz, president; and Martin Seekely, vice president and chief financial officer.
Phar-Mor's original motion on the matter proposed that Ficarro, Schwartz and Seekely be paid retention payments equaling two times their annual salaries and bonuses. Butler and Estrun would not receive the incentives, Ficarro explained, because they are not considered operating management personnel.
Ficarro said Phar-Mor remains intent on operating as an independent company and has no buyer waiting in the wings. When the company's motion stated that the stay-put bonuses would be paid when the company is sold or when it emerges from bankruptcy, he said, the lawyers were just trying to "address all possible scenarios."
He said Phar-Mor laid off about 10 employees in its accounting and systems divisions at its Youngstown headquarters over the last two weeks, part of an effort to pare back its work force and cut costs. The company is closing 65 stores around the country, but its local stores will remain except for one in New Castle.