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Kmart Seeks Increased Pay for CEO

April 15, 2002|From Reuters

NEW YORK — Kmart Corp. has asked a federal bankruptcy judge to approve a $1.5-million annual base salary, higher than a previous request, for Chairman and Chief Executive James Adamson.

The salary proposal was filed Friday evening in a motion with the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division. Kmart's attorneys plan to present the revised proposal on April 23 or April 24.

In the motion, Troy, Mich.-based Kmart said the amended employment agreement was negotiated by the company and Adamson and called the terms of the amended agreement "reasonable and appropriate under the circumstances."

Kmart said the terms are necessary to induce Adamson to serve as CEO through the company's reorganization proceedings. The company called Adamson "the best candidate" to serve as its CEO.

Kmart filed for voluntary Chapter 11 bankruptcy protection on Jan. 22 after weak holiday sales and brutal competition from rivals left it strapped for cash. Kmart, the No.7 U.S. retail chain based on 2001 sales, is the largest U.S. retailer to ever seek protection from creditors. Adamson was named chairman Jan. 17.

In an April 3 filing, Kmart sought U.S. bankruptcy court approval to pay Adamson $1 million in salary and an additional $4 million if the discount retailer emerges from bankruptcy before July 2003. The amended plan filed in court late Friday would bring Adamson's base salary to $1.5 million, retroactive to March 11, when he became CEO after the resignation of Chuck Conaway.

Adamson, a turnaround specialist, has been a Kmart board member since 1996.

In the motion, Kmart also said that Adamson shall be eligible for an annual bonus, and that the target bonus shall be 125% of his base salary at the time the bonus is given. Adamson can be paid more or less than that target bonus depending on the level of achievement of performance goals, the motion said.

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