WHITE PLAINS, N.Y. — Creditors in the A&P bankruptcy case have dismissed the retailer's proposed short-term employee incentive plan as a "Band-Aid" that should be shelved until the company presents a compelling business plan.
As reported previously in SN, A&P asked the court for permission to enact a plan rewarding certain salaried employees up to $6.8 million in total for hitting targeted same-store sales and margin levels over a six-month period. Creditors criticized it for setting conservative goals that "raises the very real specter of guaranteed payments," according to a motion objecting to the plan this week.
"It is apparent that the purpose of the KEIP [key employee incentive plan] is to serve as a short term fix to retain employees until a more well-thought-out and longer-term incentive plan can be crafted," the motion added. "Moreover, the committee has very real concerns over how the KEIP will be viewed by the debtors' approximately 40,000 unionized employees — none of whom are eligible to participate in the KEIP and all of whom have been warned since well before the commencement of the chapter 11 cases to expect numerous and painful cuts to their compensation and benefits."
The court is expected to hold a hearing on the matter here Tuesday.