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Last week, Borders Group Inc. (BGP) announced that CEO Ron Marshall was resigning as CEO, effective immediately, to go run A&P.Executive Vice President and Chief Merchandising Officer Michael J. Edwards was promoted to CEO in the wake of poor results and rumors of a possible bankruptcy on the horizon. On Wednesday, the company's stock got a nice boost when Bill Ackman -- a major shareholder and major creditor of the company -- suggested that he would not push the company into bankruptcy.
But suffice it to say, this is a company in significant turmoil facing huge operational and financial problems. So it was a bit puzzling when the company released this 8-K filing:
On January 29, 2010, the Compensation Committee of the Board of Directors of the Company adjusted the compensation of Michael J. Edwards, who was elected Interim President and Chief Executive Officer of the Company on January 25, 2010. Mr. Edwards will receive a monthly supplemental payment of $29,167 for his service as interim President and Chief Executive Officer. This amount represents the monthly difference between a $750,000 annual salary and Mr. Edwards' current annual salary of $400,000. The payment will be effective February 1, 2010 and will continue during the period that he serves as interim President and Chief Executive Officer.
Admittedly, a promotion to CEO from Chief Merchandising Officer is normally grounds for a raise -- but given Borders' poor results and the fact that its an "interim" appointment brought about by the CEO's departure, it's a bit puzzling. Is an 87% bump in pay really necessary to keep Mr. Edwards on? Last time I checked, the results of Borders' merchandising efforts hadn't been that impressive.
For a company badly in need of leadership, the fact that he saw his emergency promotion as a chance to grab more money at a company that's struggling can't be a good sign.
On January 29, 2010, the Compensation Committee of the Board of Directors of the Company adjusted the compensation of Michael J. Edwards, who was elected Interim President and Chief Executive Officer of the Company on January 25, 2010. Mr. Edwards will receive a monthly supplemental payment of $29,167 for his service as interim President and Chief Executive Officer. This amount represents the monthly difference between a $750,000 annual salary and Mr. Edwards' current annual salary of $400,000. The payment will be effective February 1, 2010 and will continue during the period that he serves as interim President and Chief Executive Officer.
Admittedly, a promotion to CEO from Chief Merchandising Officer is normally grounds for a raise -- but given Borders' poor results and the fact that its an "interim" appointment brought about by the CEO's departure, it's a bit puzzling. Is an 87% bump in pay really necessary to keep Mr. Edwards on? Last time I checked, the results of Borders' merchandising efforts hadn't been that impressive.
For a company badly in need of leadership, the fact that he saw his emergency promotion as a chance to grab more money at a company that's struggling can't be a good sign.
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Reader Comments (Page 1 of 1)
2-05-2010 @ 10:57AM
beltzclay said...
Normally would not mind this type of adjustment but with Borders recently laying off 150+ people in Corp. office an further cuts in the field pending it is untimely.