Kmart Seeks Court’s OK on CEO Payment
Kmart Corp. is seeking U.S. Bankruptcy Court approval to pay Chief Executive James Adamson $1 million in salary and an additional $4 million if the discount retailer emerges from bankruptcy protection before July 31, 2003, according to court documents.
After that date, the payment will decrease $7,299 a day. If Troy, Mich.-based Kmart is still under bankruptcy protection after April 30, 2004, no payment will be made.
Adamson also is eligible for a bonus of 125% of his base salary, or $1.25 million.
In other news, investors David Tepper and Joseph Harrosh recently bought preferred securities of Kmart that are convertible into common stock in a gamble that their value will rise as the retailer reorganizes.
The investors, buyers of stocks and bonds of companies at or near bankruptcy, , acquired stakes in Kmart’s 7 3/4% trust convertible preferred securities for a fraction of their $50 face value.
Tepper, a former Goldman Sachs & Co. executive, and Harrosh are among so-called vulture investors who take stakes in troubled companies, typically at depressed levels.
In recent weeks, the preferred shares have more than doubled to $10.30 from a low of $5.08 in January. Kmart’s common shares, which have fallen 75% this year, closed down 6 cents at $1.37 on the NYSE.
