Toys R Us has won US court approval for a controversial plan to pay top executives up to $21 million in bonuses, hoping the extra funds will incentivise execs to boost the struggling retailer’s sales this Christmas season.
Toys R Us lawyer Joshua Sussberg, stated at the hearing at the US Bankruptcy Court, that the company is "laser-focused on the holidays", citing that only half of the US population have completed their holiday purchases indicating there is still time to motivate shoppers to "buy as much as they can."
40 per cent of the retailer’s net sales come in the fourth quarter, meaning outstanding sales in this period may be the company’s only hope for a sharp turnaround.
Judge Keith Phillips approved the bonus plan over an objection by the US Trustee, a government bankruptcy watchdog, after Toys R Us advisers called the payments reasonable.
Under the plan, 17 eligible executives would split about $21 million if earnings before interest, depreciation and amortization for this fiscal year reach $641 million.
The news comes just two days after the international company announced it would be closing 26 of its UK stores, reducing its retail presence in the UK by a third and putting up to 800 jobs at risk.