Toys R Us Gets a Big Win

2017-12-11 by Ronn Torossian

A lot of retail stores are looking for a big win this holiday season. At least one has gotten a win, but not exactly what they were looking for. Thanks to a win in bankruptcy court, Toys R Us will be allowed to pay $16 million in bonuses to top executives … IF the company manages to bullseye sales projections this season.

And that’s a pretty big “if.”

While registers are beeping more this season than they have in the recent past, more shoppers are choosing to shop online than ever before as well. Those online shoppers are peeling away at Toys R Us’ chances of hitting sales goals. And, while the bonuses are not yet a done deal, bankruptcy court trustee Judy Robbins has been arguing for the interests of the creditors, who don’t think $16 million should be going out to executives they’re holding responsible for the poor state of the store’s finances.

There’s also a bit of a legal gray area. During bankruptcy, executives are allowed incentive bonuses, but they are not allowed to receive retention bonuses for sticking with the company through the tough financial times. Robbins says the proposed bonuses are not incentives for good performance, they are clearly meant to pay executives to stick around.

In her filing, Robbins said: “It defies logic and wisdom, not to mention the Bankruptcy Code, that a bankrupt company would now propose further multi-million dollar bonuses for the senior leadership of a company that began the year with employee layoffs and concludes it in the midst of the holiday season in bankruptcy…” And Robbins was just getting warmed up… “Apparently, this Christmas, Toys R Us intends to deliver not only ‘children their biggest smiles of the year’ but the insiders, too.”

Statement Raises Hackles

The statement was meant to raise hackles in court, and it certainly won’t sit well with the consumer public wondering where to shop this year. They are liable to wonder: if employees are getting laid off, why are executives getting bonuses?

Toys R Us countered that they had to pay the bonuses to keep the executives working hard through the bankruptcy proceedings: “It is the [company’s] employees – and more particularly the senior management team – that must execute at this critical juncture and provide the foundation for a successful turnaround…”

Of course, some consumers have read that statement and pointed out that it’s the employees that get the shaft when top executives get big bonuses. Even if they get out of this hole, Toys R Us will have a lot more work to do.

About Ronn Torossian

Ronn Torossian is the Founder and CEO of 5W Public Relations. He is an experienced leader in the public relations industry with over 20 years of experience. Ronn Torossian has been named as Public Relations executive of the year by the American Business Awards, and has run countless award-winning Public Relations programs.

5w ronn torossian

Ronn Torossian: Insights from a Native New Yorker and CEO of 5WPR

Ronn Torossian is the founder and CEO of 5W Public Relations, one of the largest independently-owned PR firms in the United States. With over 20 years of experience crafting and executing powerful narratives, Torossian is one of America's most prolific and well-respected Public Relations professionals. Since founding 5WPR in 2003, he has led the company's growth, overseeing more than 250 professionals in the company's headquarters in midtown Manhattan. With clients spanning corporate, technology, consumer and crisis, in addition to digital marketing and public affairs capabilities, 5WPR is regularly recognized as an industry leader and has been named "PR Agency of the Year" by the American Business Awards on multiple occasions. Throughout his career, Torossian has worked with some of the world's most visible companies, brands and organizations. His strategic, resourceful approach has been recognized with numerous awards including being named the Stevie American Business Awards 2020 Entrepreneur of the Year, the American Business Awards PR Executive of the Year, twice over, an Ernst & Young Entrepreneur of the Year semi-finalist, Metropolitan Magazine's Most Influential New Yorker, a 2020 Top Crisis Communications Professional by Business Insider, and a recipient of Crain’s New York 2021 Most Notable in Marketing & PR. Torossian is known as one of the country's foremost experts on crisis communications, and is called on to counsel blue chip companies, top business executives and entrepreneurs both in the United States and worldwide. Torossian has lectured on crisis PR at Harvard Business School, appears regularly on CNN & CNBC, is a contributing columnist for Forbes and the New York Observer, and has authored two editions of his book, "For Immediate Release: Shape Minds, Build Brands, and Deliver Results With Game-Changing Public Relations," which is an industry best-seller. A NYC native, Torossian lives in Manhattan with his children. He is a member of Young Presidents Organization (YPO), and active in numerous charities