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Monday, October 25, 2004

Once more, with feeling: Corporations are Criminals

K-Mart, being less adept at extorting money from its suppliers and employees than its monstrous cousin Wal-Mart, makes its CEO's rich on the backs of stockholders and taxpayers.

A story from Thursday's Detroit Free Press: $105 million awaits former Kmart CEO
Julian Day, who helped lift Kmart from the scrap heap of American retailing to become a profitable company, will walk away from the Troy retailer with stock options valued at $105 million as of Wednesday, according to his exit package detailed in a government filing.
The news was met with a series of groans from some analysts as well as former Kmart employees and shareholders, who lost billions in stock when Kmart emerged from bankruptcy last year and declared old shares worthless.

Kmart has amassed nearly $3 billion in cash from operations and selling stores to other retailers since emerging from bankruptcy last year. It has not said how it intends to spend it.

"This is a company with billions of dollars. How they worked this deal is just unbelievable," said Gordon Heilbrunn, a former shareholder from Madison Heights. "My main concern is all these people got taken." Former Kmart executive Gary Ruffing, now a retail consultant at BBK Ltd. in Southfield, said: "I wish it was me. I lost everything. It certainly seems like a lot of money if you consider it was his job to fix the retail business and there are still double-digit declines in sales."
So surely the state of Michigan will step in on behalf of the stockholders who were screwed so this clown could walk away with a cool hundred mil, right? Of course not. From Saturday's Free Press:
The state has offered Kmart Holding Corp. at least $45 million in incentives to keep its headquarters in Michigan, according to documents obtained by the Free Press under the Freedom of Information Act.

The nation's third-largest discount retailer also has asked officials in Michigan and Georgia to sweeten the pot with a $10-million cash payment, the Free Press has learned from people who requested anonymity. Kmart spokeswoman Caryn Klebba said Friday that the company had no comment on the relocation efforts.

"It's not unusual to push cities to do things. Incentives are expected. As far as a lump of cash on top of that, anything is on the table," said a local real estate expert who requested anonymity. "It is a little extreme, given the budgets of states."
So K-Mart gives a CEO who sold off a bunch of its stores (laying off workers in the process) and screwed its stockholders through bankruptcy $105 million, and then turns around and tries to extort the state for $10 million in cold cash on top of $45 million in incentives. Here's my suggestion: K-Mart takes $55 million out of Day's golden parachute instead of the state incentives, and takes the remaining $50 million and shoves it up its flashing blue light.