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Tops execs claim that the bonuses are merited because they didn't cause the problems, which are:
1- to much debt--basically, that means that they paid too much for the company. They could have negotiated a better deal and have Morgan -Stanley pay off some of that debt.
2-competion with Wegmans, Aldi, Walmart and others- Don't ALL of the retailers have this same competition?
Pension deal removes potential $180 million hurdle in Tops bankruptcy
Tops Markets has settled a major pension dispute that could have cost the company more than $180 million, making its path out of bankruptcy clearer.
The settlement, reached earlier this month following two days of meetings with a mediator, could end a fight that has dragged on for more than four years. The dispute has cast a cloud over Tops' finances, as well as the retirement funds of more than 600 workers at a grocery warehouse in Lancaster that the supermarket company acquired in December 2013.
While the details are still being finalized and the deal must be approved by a U.S. Bankruptcy Court judge, the settlement would resolve one of the biggest financial hurdles that Tops faces as it tries to restructure its business and emerge from bankruptcy.
For Tops, the deal frees it from an expense that could have cost it more than $100 million. The agreement means Tops no longer would be liable to pay as much as $183 million over 20 years to meet funding obligations to the Teamsters pension fund.
Instead, Tops, C&S and the Teamsters pension fund will contribute a total of $15 million that will help replace – at least in part – the pension benefits that the warehouse workers would have accumulated since the end of 2013. Those payments likely would be made into a type of retirement account.
"We are pleased to have reached an agreement in principle with the Teamsters, which will allow us to provide important benefits to Teamsters’ members," said Kathleen Romanowski, a Tops spokeswoman. "It represents an important milestone in our financial restructuring efforts."
For workers at the former C&S warehouse in Lancaster, who have not been accruing any additional pension benefits since Tops acquired the warehouse more than four years ago, the deal will provide them with a one-time payment from that $15 million funding pool, averaging about $25,000 per eligible employee, in a new retirement-type account that will be established for them.
It is likely, however, that payment will not fully reimburse the Tops warehouse workers for the additional pension benefits that they would have accumulated since the end of 2013. The Teamsters union is working on economic models to determine the best way to use those funds to offset the impact on workers, said Brian C. Dickman, the president of Teamsters Local 264, in a letter to workers.
For the Teamsters pension fund, which is underfunded, the settlement will shore up its finances by providing it with a cash infusion through the payment of the withdrawal liability that had been in dispute.
That obligation, valued at nearly $95 million in today's dollars, will be paid by the warehouse's former owner, C&S Wholesale Grocers, which supplies Tops with about two-thirds of its merchandise. Because Tops already has paid $29 million toward that liability since the end of 2016, C&S will pay about $65 million to cover the rest of the money owed to the pension fund.
The pension deal was struck between Tops and Teamsters Local 264, which represents workers at the Lancaster warehouse, as well as the Teamster pension fund and C&S. The agreement is expected to be considered by the Bankruptcy Court during a hearing on June 21.
The settlement, however, does not resolve a separate financial hurdle involving an underfunded pension fund for workers represented by the United Food and Commercial Workers Union Local One. That fund, which covers the vast majority of Tops' unionized workers, is underfunded by more than $380 million. Tops has told UFCW officials it wants to reduce its payments to that pension fund by two-thirds as part of its bankruptcy restructuring.
Tops' path out of bankruptcy clearer after key deal over worker pensions
Tops Markets has reached a critical pension agreement with the union that represents most of its workers, potentially removing the biggest hurdle that the supermarket chain faces as it tries to emerge from bankruptcy.
The agreement in principle, which must be approved by the union workers in a vote early next month and a U.S. Bankruptcy Court judge, would make its path out of bankruptcy clearer by resolving a major pension funding issue that has long clouded Tops' finances.
For Tops, the agreement removes the biggest remaining hurdle it was facing as it tries to restructure its operations in bankruptcy, resolving a pension issue that had become a significant drain on the company's finances.
The deal, however, would mean smaller payments in retirement for members of the United Food & Commercial Workers union Local One, whose pension plan is badly underfunded. Even before the potential settlement, that $380 million funding shortfall cast doubts on whether the plan would be able to maintain benefits at their current level in the coming years.
For the nearly 85 percent of Tops workers who are represented by the UFCW union, the settlement means lower pension payments in the long run, partially offset by contributions that will be made to a 401(k) plan that will be established as part of the agreement.
"This has been a long and tedious negotiation process" between the union, Tops executives and representatives of the Tops bondholders who will own the company after it emerges from bankruptcy, said Frank DeRiso, who briefed nearly 3,000 union members on the agreement during a telephone conference call earlier this week.
"This process took so long because we had to make sure that the offer was going to be sufficient to help offset some of the monthly pension loss in the future," he said.
If the pension settlement is approved, the biggest remaining hurdles still facing Tops are to identify its underperforming stores and determine which ones it will close and to formalize a deal with its secured creditors, who control most of the company's more than $700 million in debt, that would exchange that debt for an ownership stake in the restructured business.
"We are pleased to have reached an agreement in principle," said Kathleen Romanowski, a Tops spokeswoman. "It represents an important milestone in our financial restructuring efforts.
Tops previously has said about one of every eight Tops stores was underperforming and at risk of closing, although the company has since been negotiating with some of its landlords to reduce its lease payments and make those stores more financially viable.
The UFCW Local One Pension Fund already is classified as being in "critical" condition by federal pension regulators because it only has enough assets to cover a little more than 50 percent of the benefit payments that have been promised to the plan's participants.
Tops initially had told UFCW officials it wanted to reduce its payments to that pension fund by two-thirds as part of its bankruptcy restructuring – a step that would have further weakened the plan's financial condition. The company also sought $30 million in labor cost savings, union officials said.
Instead, the settlement would preserve the terms of the current contract between Tops and the 12,000 Tops workers who are represented by the union, except for the pension changes, DeRiso said.
The agreement will keep the current pension plan in place, without a reduction in benefits, until it runs out of money, probably in about eight years, union officials said. Once that happens, the plan will be taken over by the Pension Benefit Guaranty Corp., which takes over failed pension plans, with participants receiving a guaranteed – but reduced – benefit from the PBGC.
The PBGC, for instance, caps the pension benefit payable to a worker with 30 years of credited service at $12,870. For a worker with 40 years of credited service, the top annual benefit is $17,160.
To make up some of the lost benefits, the agreement calls for the creation of a new 401(k) plan that would be funded with $12 million in seed money. That money would be divided among eligible workers, based on their age and years of service, union officials said.
Nearly 8,000 current Tops workers were participants in the UFCW pension plan at the beginning of last year, according to a report filed with the U.S. Department of Labor. A little more than 6,400 participants are collecting benefits from the plan, while another 8,000 participants are eligible to collect benefits in the future.
As part of the agreement, Tops agreed to reduce the funding for the retention bonus plan that is seeking to reward 115 top managers and executives for not leaving their jobs through the end of this year. Tops agreed to reduce the size of the bonus pool by 14 percent, or $500,000, to $3 million as part of the deal, although the union still opposes the plan.
"This is an unnecessary, short-term program which simply rewards headquarters staff who should be doing their jobs for what hopefully is a short remaining period in bankruptcy," said Richard Seltzer, a UFCW attorney. "It continues to ignore any sense of shared sacrifice and it completely forgets the bargaining employees at the stores who deal with customers."
Michael Buenzow, Tops' chief restructuring officer, said in a court filing this week that the retention bonuses are needed to prevent employees with hard-to-replace skills and expertise from leaving the company at a time of uncertainty. He said six of the key employees who would have been eligible for the bonuses already have left the company, while two others have told Tops they are leaving.
Tops, which originally had hoped to be ready to move out of bankruptcy by August, has asked the bankruptcy court to give the company until late December to complete work on its restructuring.
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You got it, its basically bribe money to keep the execs onboard throughout the bankruptcy process even though their leadership or lack of is a primary reason that the ship is sinking. You saw the same thing when Hostess was going under and the execs got millions, its not fair but in theory the union(s) are looking out for the front line employees after they get their money of course...
You got it, its basically bribe money to keep the execs onboard throughout the bankruptcy process even though their leadership or lack of is a primary reason that the ship is sinking. You saw the same thing when Hostess was going under and the execs got millions, its not fair but in theory the union(s) are looking out for the front line employees after they get their money of course...
Really a shame for long term employees. The union put it to the members today for a vote on the pension issue. Not much of a choice, agree to a revised pension plan or go to court and have a judge dismiss the debtors (Tops) pension debt obligations, meaning you get zero. Great way for a company to dump or diminish a pension for loyal employees. Tops has lots of stores in rural upstate NY towns that are the only store for miles around. If they can't make a profit with those stores then somethings wrong.
Tops does well when they are the only game in town. Their prices were considerably higher than the competition. Walmart, Wegmans, Aldi are all waaay cheaper. Their deals were good but otherwise I stayed away.
Tops is closing 5 of their 15 stores in the Rochester region. Seems like they are losing the battle in Rochester. How long before they are gone from the area completely? They are giving up a lot of market share, and also buying power eliminating these and 5 other stores. Surely some truck drivers and warehouse personnel will be effected locally.
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Tops' path out of bankruptcy clearer after key deal over worker pensions
