Executives to seek substantial bonuses

? Just 10 days after telling 22,000 store employees they are out of a job, Kmart’s top executives will ask a bankruptcy court judge to approve their multimillion-dollar bonuses.

Kmart Chairman James Adamson, who has been on Kmart’s board for six years, and Chuck Conaway, its chief executive since May 2000, arranged to receive the bonuses in the discount retailer’s Chapter 11 bankruptcy petition.

Kmart’s creditors and a small union have questioned why Adamson and Conaway are among Kmart executives receiving large bonuses. The men steered the company into bankruptcy court in January, when Kmart could no longer pay its bills.

Creditors have until Wednesday to object to the bonuses. A hearing on the payments, which would also go to 44 other top executives, is scheduled for March 20 before U.S. Bankruptcy Judge Susan Pierson Sonderby in Chicago.

Adamson’s contract pays him $4.5 million and gives him a $4 million bonus if Kmart can come out of bankruptcy next year. Conaway is to get $11.5 million if the firm is reorganized or if he is fired without cause.

Once the contentious fight over the bonuses is behind Kmart, it must prepare for what may be the largest liquidation sale in retail history, decide how to pay 1 million creditors and persuade shoppers to rediscover their Big K or Super K.

And that, the experts say, is a lot to do during the next few months as the retailer tries to meet its goal of coming out of bankruptcy court reorganization by July 2003.

Kmart’s next step is to sell off the merchandise of the stores to be closed. Sonderby the discounter’s store-closing procedures at a Wednesday hearing. It filed for protection from its creditors in January.

Kmart also will hire Abacus Advisory & Consulting Corp., a liquidator that has helped dispose of inventories from other retailers in bankruptcy, as an advisor. The company expects to begin liquidating up to $1 billion in inventory this spring.

Executives also must complete work on a plan that describes how they intend to stabilize and turn around the company, said bankruptcy lawyer Joel Applebaum.