Revlon’s plan to give bankruptcy bonuses to its top executives won approval by a federal judge despite opposition from a US Justice Department watchdog. Under the proposal, eight senior executives would receive as much as $36 million should the company hit certain financial and other metrics.
Brian Masumoto, the US Trustee representative in the case, argued that the bonuses are the company’s attempt to retain senior executives rather than to incentivize them to work harder. Under the approved plan, the executives would earn the incentive payments if the cosmetics company meets financial targets that are harder to hit than in previous years.
Revlon’s lawyer Robert Britton argued that the targets are “far from a layup” and the bonuses will motivate the executives to “do more than just show up to their jobs” to achieve them.
Revlon filed for bankruptcy in June as the global supply chain crunch squeezed the debt-laden company while it struggled to tap into a broader cosmetics sales boom driven by social media influencers. The 90-year-old company got its start selling nail polishes during the Great Depression and later added coordinated lipsticks to its collection.
The bankruptcy caps a tumultuous period for the company, which suffered during the pandemic and faced years of declining sales as consumer tastes changed and upstart brands ate into its market share. More recently, the company said supply-chain pain and inflation were challenging its ability to keep up with rebounding consumer demand.
The company has long struggled with a burdensome debt load, even dating back to when it was purchased in 1985. According to news sources, in 2003, owner Ron Perelman stepped in with a promise of cash from his holding company, MacAndrews & Forbes, to stop Revlon from defaulting as it wobbled under $2 billion in debt. The company’s debt load proved burdensome, especially after it sold more than $2 billion worth of loans and bonds to fund its acquisition of Elizabeth Arden in 2016.
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