A&P must boost severance if it wants $5 million retention plan
A&P must boost severance if it wants $5 million retention plan
Shortly after sending layoff notices to more than 22,000 employees, The Great Atlantic & Pacific Tea Co. requested the use of $5 million to retain key management employees. A union representing A&P workers, as well as a trustee involved with the bankruptcy proceedings, said the plan was unfair, and Robert Drain, U.S. Bankruptcy Court judge, agrees with them.
Drain approved A&P's retention plan under the condition that just under $1.1 million be diverted toward the payment of severance for union and non-union employees that hadn't been included in the company's proposed retention plan. Previously all union employees had been excluded.
While the original plan would have benefitted 495 executives and key management employees — less than 2 percent of the overall workforce — nearly $1 million of the funds would be divided between just 11 employees.
A union statement said A&P's key employee retention plan was “outrageous.”
Averaging losses of $4.5 million a month, A&P said the retention plan was necessary to keep key management employees on staff during its wind down since its "employees are resigning at an escalating rate," including numerous executives, store managers and district managers.
Initially upon filing for bankruptcy protection the company said it would only sell about 120 stores and close an additional 25; however, since that time A&P has started to look for bidders for its remaining 153 stores.
