In a time when financial stability and the well-being of a company’s broader workforce should be the foremost priority, the decision by Big Lots to offer $5.2 million in retention bonuses to four of its top executives is not only controversial but raises serious ethical concerns. As the retailer grapples with significant financial challenges, including a potential bankruptcy, this move appears out of touch with the realities facing the rest of the company and its employees.
Big Lots’ board of directors approved these one-time cash retention awards on August 12, despite the company’s ongoing struggles. According to a recent filing with the U.S. Securities and Exchange Commission, CEO Bruce Thorn is set to receive $3.15 million, while the Chief Financial and Administrative Officer Jonathan Ramsden will get nearly $970,000. Other top executives, Ronald Robins, Jr. and Michael Schlonsky, will each receive over half a million dollars. These amounts are staggering, especially in light of the financial precariousness the company has admitted to.
The rationale behind such bonuses is often to retain key leadership during turbulent times. The agreements even include a clause requiring the executives to repay the money if they voluntarily leave within 12 months, barring a few exceptions. However, this logic becomes questionable when the broader context is considered. Big Lots is not merely experiencing a rough patch; it is facing existential threats that have led it to issue a going concern warning in June. This signals the possibility that the company might not meet its credit and loan obligations soon—an alarming sign for any business, let alone one that operates nearly 1,400 stores.
In the last year, Big Lots has taken drastic cost-cutting measures, such as the sale-leaseback of 22 stores and a distribution center, and securing a $200 million term loan that is backed by the company’s corporate headquarters and much of its working capital. These actions are a clear indicator of a company in distress. Moreover, the retailer recently amended its credit and loan terms to allow the closure of up to 315 underperforming stores, more than double the number previously permitted. This speaks volumes about the scale of the challenges ahead.
Given this backdrop, the decision to funnel millions into executive retention bonuses seems not only tone-deaf but also potentially damaging to the company’s reputation. It sends a troubling message to employees, many of whom are likely facing job insecurity due to store closures, and to creditors and investors who may view these bonuses as a sign of misplaced priorities.
There is also the broader issue of corporate governance and responsibility. In times of crisis, the focus should be on stabilizing the business, securing the jobs of as many employees as possible, and ensuring that the company can meet its obligations to creditors and suppliers. Instead, by prioritizing executive retention bonuses, Big Lots risks undermining trust among its stakeholders and the general public.
It is worth noting that Big Lots is not the first company to award such bonuses during financial turmoil, and it likely won’t be the last. However, these actions often provoke public and investor outrage, and for good reason. When a company is on the brink of bankruptcy, rewarding those at the top while leaving the rest of the organization to bear the brunt of cost-cutting measures can come across as deeply inequitable.
Big Lots’ decision to offer $5.2 million in retention bonuses to four executives during a period of severe financial uncertainty is a move that deserves scrutiny and criticism. It reflects a broader trend in corporate America where the interests of top executives are prioritized, even at the expense of the company’s long-term health and the well-being of its workforce. At a time when tough decisions are required to navigate through financial instability, this approach seems not just ill-advised but also ethically questionable.
