Kmart Releases Loan Recipient Execs17 Jan, 2003 By: Hive News
Struggling Kmart today announced the chain severed employment relationships with all remaining executives who received special retention loans in 2001 under former chairman and CEO Charles Conaway's tenure.
The executives are Janet Kelley, EVP, general counsel and assistant secretary; Mariana Keros, VP, trend & product development; Douglas Meissner, division president, Western Division; Paula Paquette, SVP, hardlines and home; and, Lee Viliborghi, Regional VP. Successors remain to be named.
The action was a first step toward reorganizing management structure and establishing an emergence management team to bring the company out of Chapter 11 reorganization by May.
"While these five individuals have independently made substantial contributions to Kmart, the company felt it was important to put the controversy surrounding employees involved in the special retention loans behind it as the company prepares to emerge from Chapter 11,” Chairman James B. Adamson said on behalf of the board. “We are confident that there will be an orderly transition and will now focus our efforts on establishing an emergence management team that will lead Kmart beyond its Chapter 11 cases and implement the five-year business plan approved by the Board earlier this week and which will be publicly filed in our Disclosure Statement and Plan of Reorganization on or about Jan. 24, 2003."
In a related action, Kmart is making written repayment demands on all recipients of the 2001 special retention loans.
A Kmart spokesman said that the stewardship review undertaken by the Audit Committee of the Board of Directors, with the participation and cooperation of the statutory committees appointed in the company's Chapter 11 case, had developed credible and persuasive evidence that the 2001 special loan program had been established without appropriate disclosure of material information to the Board of Directors by former members of executive management. The Company said that it expected to include information regarding the stewardship review in the Disclosure Statement.
In another related development, Handleman Co. issued a statement saying the chain's recent store closures should not have a severe impact on the rack jobber, which has already taken steps to weather the discounter client's bankruptcy.