A&P Wins Approval of Executive Bonuses Ahead of Union Talks
April 28, 2011, 2:26 PM EDTBy David McLaughlin
(Updates with store sales in seventh paragraph.)
April 28 (Bloomberg) -- Great Atlantic & Pacific Tea Co., the bankrupt supermarket company, won approval to pay bonuses to senior executives as it’s about to negotiate with union workers to cut labor costs.
The United Food and Commercial Workers union, an A&P union, asked a bankruptcy judge to reject the bonus plan, saying in a court filing that it is “too rich” and “destructive of employee morale.”
“This is an inequitable and unfair plan,” Richard Seltzer, a lawyer for the union, told U.S. Bankruptcy Judge Robert Drain at the hearing in White Plains, New York.
The plan approved by Drain could pay as much as $1.3 million to Chief Executive Officer Sam Martin as the company restructures in bankruptcy, according to a company court filing. As much as $3.7 million could be paid to a total of six executives based on company performance, according to the filing.
A&P, based in Montvale, New Jersey, is about to enter negotiations with union workers to seek concessions from them, according to the judge. The judge approved the bonus proposal even though it could appear “inequitable” given upcoming union talks.
“This is an incentive program where the covered employees are not being paid a bonus simply to continue doing their jobs but rather to achieve a result that is exemplary and therefore should be viewed as an incentive,” Drain said.
Also at today’s hearing, Drain said A&P could move ahead with plans to sell 25 of its Superfresh stores at an auction. There are 22 of the stores in Maryland, two in Delaware and one in the District of Columbia, the company said.
The case is Re The Great Atlantic & Pacific Tea Co. 10- 24549, U.S. Bankruptcy Court, Southern District of New York (White Plains).
--Editors: Fred Strasser, Peter Blumberg
To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
