Toys R Us Wants To Give $16M In Bonuses To Employees Amid Bankruptcy

Toys "R" Us sought permission in court to reward its employees with $16 million in bonuses amid the company's bankruptcy proceedings, according to reports. The bonuses would be given to its top executives and other team members if the toymaker succeeds in hitting some of its financial goals during the holiday season. The $16 million request could increase if the company performs better than expected.

Toys "R" Us is in the middle of a financial crisis. The famed toy store filed for Chapter 11 bankruptcy in the U.S. and Canada Sept. 19 after acquiring $5 billion in debt. It has struggled to compete with online retailers like Amazon. The company intends to operate business as normal under the shift, which means regular programs like gift cards will continue at all Toys "R" Us and Babies "R" Us branches.

"Toys 'R' Us filed several motions with the court including a proposal for an incentive program which includes all team members, not just senior executives," Meghan Sowa, a media representative for Toys "R" Us, told International Business Times Thursday. "This type of plan is standard practice for a company involved in a restructuring and in this case rewards team members at all levels of the company."

"Before an incentive program can be implemented, we will continue consulting with our creditors and the US trustee regarding the program and the program must be reviewed and approved by the Federal Bankruptcy Court," Sowa added.

Bonus structures are commonly reevaluated when a company files for bankruptcy, but they don't always get approved by the court. Sports Authority sought permission in 2013 to pay up to $2.85 million in bonuses to four executives, but a U.S. bankruptcy judge denied their request.

Should the structure be granted by the court, Toys "R" Us chief executive Dave Brandon is among the company's employees that would receive a bonus. Brandon's base salary is $3.75 million, but he received a bonus of $323,550 in 2016. This put his total earnings for the year at about $4 million, but the total jumps to $12.5 million with long-term incentives included, according to court documents.

Toys "R" US confirmed that it had 1,600 employees at the time of their bankruptcy. It also boasted nearly 65,000 employees worldwide, with plans to hire additional help for the upcoming holiday season. The retailer joined a growing list of big-name retailers that are facing bankruptcy complications this year. BCBG Max Azria, RadioShack, Payless ShoeSource, Vitamin World and Gymboree are among several companies that filed for bankruptcy in 2017.

Toys "R" Us will learn whether its bonus plan has been approved Dec. 5 at the U.S. Bankruptcy Court in Richmond, Virginia.