Circuit City OKs Cash Incentives to Retain Top Execs

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Circuit City, the nation's No. 2 electronics retailer, approved millions in cash incentives to retain its top talent following the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each and senior vice presidents could get $600,000, provided they stay with the company until 2011, according a filing late Wednesday with the U.S. Securities and Exchange Commission. Those eligible for the awards at Circuit City include Bruce H. Besanko, executive vice president and chief financial officer; George D. Clark Jr., executive vice president of multichannel sales; Reginald D. Hedgebeth, general counsel; and Eric A. Jonas Jr., senior vice president of human resources, the filing said.

According to the company, "the purpose of the award is to ensure the stability of the company's leadership team." Circuit City Stores Inc. said in September that it lost $62.8 million in its second fiscal quarter, on lower overall sales and continued restructuring activity, compared with a $10 million profit a year earlier. Consumer electronics shares fell this week after Best Buy Co. implied its fourth quarter earnings would be below Wall Street expectations. The awards are effective as of Jan. 1, 2008. Awards also were approved for employees at the vice president, director and store director levels.

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#1 +GreyWolfSC on 21 Dec 2007 - 04:13

Just about anyone has the IQ to be a corporate executive. Don't pay them more, fire them and replace them. Keep your costs down and make your customers happy instead.

(2 replies) #2 L3thal on 21 Dec 2007 - 04:55

Yea, they fired over 3000 highly talented employees because they were making too much money (probably around $12-15/hour) and now they decide to keep executives and pay them big cash when they aren't even the ones in the stores selling their products.

This is why CC is going down the drain.

#2.1 ahfunaki on 21 Dec 2007 - 07:21

Quote - (L3thal said @ #2)

Yep...

#2.2 TSThomas on 22 Dec 2007 - 15:37

Typical corporate nonsense. Experienced similar crap myself while working at a multi-national for a few years (Killing off of bonuses at below middle management grades, year on year decreases in pay rises, innovation at lower levels stifled so as "not to affect my budget", etc. - oh & staff are our most important resource BTW). I sympathize greatly... I myself only escaped to a government job a little over a year ago & I couldn't be happier.... plus I managed to leave with all my source code password protected.

Last edited by TSThomas on 22 Dec 2007 - 15:43

#3 BassRck4 on 21 Dec 2007 - 11:24

agree,lousy practice to save a buck, BOYCOTT!

#4 +Ely on 21 Dec 2007 - 12:24

That company is messed up, they fired thousands of employees last year, good ones, now the elite wants to get the big cash those employes were supposed to get, I feel sorry for people who work on that place but it seems to be going down and quickly.

#5 cork1958 on 21 Dec 2007 - 14:03

There was just a story on Good Morning America about how so many companies stocks are at all time lows and yet the CEO's got record breaking bonuses.

What kind of sense does that make? What a stupid country we have become!

#6 Joey992 on 21 Dec 2007 - 15:41

This is going to be a nice slap in the face for management at the store level. I wouldn't be surprised if store managers and assistant managers move on to Best Buy, Target, Kohl's, etc. in the near future with this kind of practice happening.

#7 naap51stang on 21 Dec 2007 - 19:19

As much of a capitalist as I am, this is just stupid! The only way I would award bonus money to execs is if they did something directly related to increasing the profit of the company. Since (according to the article) these are "retention"
bonuses, it's no wonder circuit city is in the tank. Anytime I walk through one of their stores, it reminds me of walking
through a funeral home. Quiet & deserted.

#8 Imnotrichey on 21 Dec 2007 - 21:38

in other news, middle managemet as CC is upset for not receiving a christmas bonus and former are employees are still looking for a new job since being fired for being paid $5 dollars an hour too much

#9 berz on 22 Dec 2007 - 14:21

"the purpose of the award is to ensure the stability of the company's leadership team."

Translation: The entire company has been shaken to its core due to some bad bad decisions and the higher up management is threatening to walk unless we bribe them to stay.

Generally, if there is a mass exodus of the top level management, a gigantic irreversible rift will begin to develop throughout the company. Furthermore, investors tend to like companies with stable, established management. A huge shakeup will brand the company "too risky" and people will sell their shares in droves. Such shakeups hurt the value of the company tremendously.

No, it's not fair, but fairness isn't really the name of the game. Frankly, if I were CEO, I'd call an emergency meeting of all top level management and draft a total quality initiative with a framework for a top-down restructuring. Reassess the strong points Circuit City in comparison to its competition and develop them further, while retooling the initatives that got them to this terrible point in the first place (ie, the mass "stingy" layoffs, etc). All eyes will be on them at this point (both on Wall Street and the conventional media) and it would be a great time to announce the new and improved Circuit City. Also, hiring back at least part of the 3,000+ employees, even at a slight pay cut, would be a good start. Your image is what drives stock price and "value" of the company. Don't lose sight of that.

But what do I know?

-Berz

#10 Lucas on 24 Dec 2007 - 23:48

Who's the first?

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