Brookstone’s Bankruptcy Bonuses

Bloomberg

Brookstone employees hoping to snag an air hockey table, arcade game or their very own drone could get some extra cash for a shopping spree if the retailer’s bankruptcy case goes well.

The employees, including several executives, stand to earn some $2 million in bonuses during the specialty retailer’s bankruptcy case.

Brookstone filed for Chapter 11 protection Thursday with plans to sell itself the owner of another quirky retailer, Spencer’s, for $147 million. The Spencer’s bid is subject to higher bids through a court-overseen auction.

To ensure a smooth path to a sale that brings in as much cash as possible for creditors, Brookstone is proposing to reward several dozen workers–whose identities Brookstone wants to shield (no, not this kind of shield) from public view—with bonuses. Half of the bonuses would be paid out upon the closing of the company’s sale, while the remainder would be paid two months later.

Under the proposal, four executives would earn bonuses tied to the sale price as well as the company’s cash flow. For example, if Brookstone closes the $147 million deal currently on the table, then the executives would share roughly $840,000 in bonuses, although this doesn’t take the cash-flow targets into account.

Another 33 nonexecutive employees would share up to $1.28 million in bonuses as long as they stick with Brookstone throughout the sale process. These employees come from the company’s finance, e-commerce, human resources and other departments. The individual bonuses will be calculated as a percentage of the employee’s base salary and range. Court papers show individual bonus amounts range from $8,552 (enough to buy two of these massage chairs) to $95,000 (let’s just say that could buy a lot of massage chairs).

The bonuses are subject to the approval of the Wilmington, Del., bankruptcy court, where Brookstone will make its first appearance Friday.

Write to Jacqueline Palank at jacqueline.palank@wsj.com. Follow her on Twitter at @PalankJ.

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