PHAR-MOR Managers' departure boosts bonus plan fund by $70,000
Rewarding loyalty is less costly than hiring new managers, the company says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- A couple high-level Phar-Mor managers who have left the company have freed up some extra cash for other managers.
The struggling discount drugstore chain received authority Tuesday in U.S. Bankruptcy Court to transfer about $70,000 from one employee retention bonus plan to another.
John Ficarro, Phar-Mor's senior vice president and chief administrative officer, said two high-level managers have left the company and so will not be eligible for part of their bonus.
That money now will go to reward lower-level managers who stay with the company, which filed for bankruptcy protection from creditors in September.
Programs: In November, Phar-Mor created bonus plans for about 15 high-level managers, pharmacists, and about 20 other managers.
The high-level managers were eligible for bonuses ranging from about $7,500 to $73,100, with one-third payable in December and the rest when the company emerges from bankruptcy court. The two employees who left the company were owed about $70,000.
With approval from Judge William Bodoh, Phar-Mor is placing that money into the fund for the other managers.
Michael Gallo, Phar-Mor's attorney, told the judge the company wants to reward the dedication of these workers. Payments will be made at the discretion of Phar-Mor executives.
Ficarro said some more managers will be added to the plan, but managers already in the plan also may receive more money. The original plan for these employees had $125,000.
Store employees are not included.
Phar-Mor also has a separate bonus plan for its top five executives.
Need for plan: The company said in November that it needed the bonus plans to maintain continuity at the company as it develops a restructuring plan. Keeping current management is less costly than bringing in new executives and managers, it said.
Ficarro said company officials are working on a reorganization plan. They must develop financial projections that have to be reviewed by committees that represent its creditors.
He said the level of merchandise on store shelves has improved a little recently. The company was making improvements late last year, but it became harder to work with suppliers during the holidays because of vacations.
Now that companies have returned to normal work schedules, the selection of merchandise is gradually improving, he said.
Phar-Mor officials have been trying to persuade suppliers that they will be paid for shipments. Some suppliers stopped making shipments before Phar-Mor filed for bankruptcy protection because they were concerned they would not be paid.
Phar-Mor has closed 65 stores around the country and retained 74.