As RadioShack Corp. reported dismal fourth-quarter results and announced plans to close up to 1,100 stores, its board approved retention bonuses for its top five executives, according to a Securities and Exchange Commission filing Wednesday.
The executives, including CEO Joseph Magnacca, must stay at RadioShack through March 1, 2015, to receive the bonuses, the filing said.
“After giving due consideration of the skills and talent deemed critical to the company’s business turnaround efforts currently underway, the difficult business environment and the competition for skilled, talented employees, the Management Development and Compensation Committee authorized and directed the company to enter into retention agreements with certain of its executive officers,” the filing said.
Magnacca, who joined the company about a year ago from Walgreen Co., will receive $500,000 if he stays another year. John W. Feray, who recently joined the company as chief financial officer, would receive $275,000; Telvin P. Jeffries, chief human resources officer, $250,000; Troy H. Risch, executive vice president, store operations, $275,000; and Michael S. DeFazio, senior vice president, store concepts, $187,500.
The board also approved a “special opportunity bonus” for Magnacca that could pay up to $600,000 depending on the retailer’s performance in the next year. The bonus would be paid April 3, 2015, the filing said.
On Tuesday, RadioShack unveiled its plan to close about 20 percent of its stores as it reported a $191.4 million fourth-quarter loss. Sales for the last three months of 2013 fell by 20 percent. The company blamed bad weather, inventory mistakes and fewer holiday shopping days.
For all of 2013, RadioShack posted a net loss of $400.2 million, or $3.97 per diluted share, compared with a net loss of $139.4 million in 2012. Sales for the year totaled $3.43 billion, down 10 percent, and same-store sales declined by 8.8 percent.
Moody’s Investors Service lowered its ratings on the company’s debt and maintained a negative outlook Wednesday.
“The turnaround strategy put in place by the new management doesn’t seem to be gaining much traction, and it is unclear whether the closure of 1,100 stores announced by the company will result in stabilizing margins and reducing cash burn,” senior analyst Mickey Chadha said.
RadioShack’s stock (ticker: RSH) lost 4 percent Wednesday, dropping 9 cents a share to $2.16.