Court Approves hhgregg Incentive Program

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INDIANAPOLIS -

The U.S. Bankruptcy Court for the Southern District of Indiana has approved a key employee incentive program for the remaining hhgregg Inc. executive team. If the employees, including Chief Executive Officer Kevin Kovacs, hit specific targets as the company winds down operations, they could receive a total of $675,000 in bonuses.

In a filing with the U.S. Securities and Exchange Commission, the company says the KEIP is "designed to incentivize certain members of executive management who are expected to remain with the Company during the wind-down of the Company and its subsidiaries to achieve benchmarks that will maximize creditor value in connection with the store closing sales and promote monetization of additional assets and control of expenses to be incurred during the wind-down of the Company and its subsidiaries."

In order to receive the bonuses, the employees must meet five criteria, including:

  • Total cash receipts over the course of the store closing process and the Company’s wind-down, starting April 23, 2017 through March 31, 2018, with target receipts of $90 to $110 million
  • Total cash disbursements over the anticipated life of the bankruptcy case, starting April 23, 2017 through March 31, 2018, with a target of $80 to $85 million (the “Cash Disbursement Metric”);
  • Net recovery from the Company’s phase 2 store closing sales, expressed as a percentage of the cost of the inventory, with a target of 62% to 65%
  • The date by which the Company vacates its headquarters, with a target date of August 31, 2017 
  • Cash collected from, and offsets achieved on account of, vendor credits for which the Company or its subsidiaries may be eligible, starting May 25, 2017 through March 31, 2018, with a target of $6.5 to $7.5 million.

hhgregg says the bonuses could amount to a total of $1.85 million, however that amount "would only result from extraordinary performance under each of the five KEIP metrics."

The electronics retailer filed for bankruptcy in March and was unable to find a buyer. Liquidation sales ensued and more than 220 stores and distribution centers have been closed with thousands of employees losing their jobs. 

Kovacs was named CEO in June after the company terminated his predecessor Robert Riesbeck and other top officials.

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