Company requests money for incentives Merry-Go-Round seeking to keep remaining employees

February 10, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Merry-Go-Round Enterprises Inc. is seeking court approval of an emergency request to pay hundreds of thousands of dollars in incentives to keep its remaining employees from leaving and imperiling the retailer's liquidation.

But the incentive plan leaves nothing for employees -- including about 500 at the retailer's Joppa headquarters -- who lost their jobs last week.

"The workers still there should be taken care of and the ones like us should be taken care of, but obviously the company doesn't care about employees that are no longer there," said Stan Fox, the retailer's former director of store design and construction.

Merry-Go-Round attorney Richard H. Wyron declined to comment yesterday at a hearing in U.S. Bankruptcy Court on the incentive package. But in its court filing, the company sought to justify the incentives by saying that its "ability to manage the liquidation process in a cost-effective manner depends upon the willingness of its employees, who have been demoralized by recent events and are facing certain termination in the imminent future, to nonetheless assist [Merry-Go-Round] in liquidation."

Weekly incentives would amount to 25 percent to 40 percent of base salary for the approximately 100 home office employees left, and 10 percent for district managers, according to court filings. Merry-Go-Round would also pay incentives to more than 1,100 store managers, assistant managers and regional managers assisting in the liquidation of the company's final 530 stores by August.

Meanwhile, employees laid off last week have not receive any assurances about severance and benefits, according to a Feb. 2 internal memo. "We're certainly awaiting some indication from the company as to their position," said Tom Catliota, attorney for 11 employees.

Before yesterday's court hearing, Jeffrey A. Austin, the retailer's senior vice president for human resources and development, said that both severance and retention bonuses remain "an open question."

But he said that the company is continuing health insurance coverage through March 4, and the employees' 401(k) retirement plan is protected.

Many former employees are wondering whether they will be justly compensated.

"The trust has been destroyed in the company," said Carol DiDona, a former senior analyst with nearly 13 years at Merry-Go-Round.

For many, their concerns are even more concrete: how to pay their next bill.

"The clock is ticking for many people who do not have jobs and only have unemployment [benefits]," said former merchandise planner Keith Krabbe.

A hearing on the proposed incentive plan is scheduled at 9:30 a.m. Tuesday in U.S. Bankruptcy Court.

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