retail news in context, analysis with attitude

The Wall Street Journal reports the bankruptcy judge overseeing the finances at Borders Group has approved a plan “to pay executives and other high-level employees more than $6 million in bonuses, after the bookseller worked to satisfy both his concerns and those of the Office of the U.S. Trustee.” According to the story, the judge said that “the amended bonus packages, which tie the $6.6 million in payments closer to the financial performance of Borders, were needed so Borders could ‘maintain its experienced work force’.”

The story goes on: “The executive bonuses, which won't be paid unless the company is either sold or reorganized, had called for executives to get up to $7.1 million. That number is now $6.6 million, including as much as $1.5 million to Mike Edwards, chief executive of the company's principal operating unit Borders Inc. The ‘key employee’ retention plan would give director-level employees a total of $933,000. An additional $300,000 could be awarded on a discretionary basis.”
KC's View:
This is just so profoundly annoying ... because it is all about top-down management, ignoring the fact that the best ideas rise from the bottom, that success and/or failure will be determined, to a great degree, on how people on the front lines deliver on the Borders promise and value proposition.

That’s not to say that top management does not have a significant role to play. But man, this whole bonus structure sends the wrong message to the people on the front lines.