As the final nails are driven in the failed department store’s coffin, corporate leaders of Bon-Ton are receiving millions of dollars in severance payments while some former employees are walking away with nothing after years of working for the company.
According to a recent investigation by a television station in Milwaukee, the practice, although unfair, is perfectly legal. Companies nearing bankruptcy often provide huge bonuses to higher executives in order to keep them with the company, which is exactly what Bon-Ton did.
A federal law limits employee payouts to just under $13,000 when a company files for bankruptcy, so employees who would be entitled to greater severance compensation receive substantially less in reality.
Bon-Ton distributed $2 million in retention bonuses to three executives just months before the company declared bankruptcy, according to the bankruptcy court filings. And the chairman of the board, who resigned in May 2017, still works for Bon-Ton and makes $450,000 each year with a $175,000 bonus.
Bon-Ton’s last president and CEO also resigned at the same time and left with a $500,000 bonus and an extra $100,000 for moving expenses. And one month before the company filed for bankruptcy, a new executive vice president received a $600,000 salary, a $600,000 bonus, as much as $50,000 in commuting costs, and the potential to receive an additional $900,000 in bonuses.