Kmart Corporation announced that the Company has severed employment relationships with all remaining executives who received special retention loans in 2001 under former Chairman and Chief Executive Officer Charles Conaway’s tenure.
These executives are Janet Kelley, Executive Vice President, General Counsel and Assistant Secretary; Mariana Keros, Vice President, Trend & Product Development; Douglas Meissner, Division President, Western Division; Paula Paquette, Senior Vice President, Hardlines and Home; and, Lee Viliborghi, Regional Vice President.
This action was taken by the Company as it begins to implement a reorganized management structure and establish an emergence management team in anticipation of its emergence from Chapter 11 reorganization on or about April 30, 2003.
Commenting on behalf of the Kmart Board, Chairman James B. Adamson said, “While these five individuals have independently made substantial contributions to Kmart, the Company felt it was important to put the controversy surrounding employees involved in the special retention loans behind it as the Company prepares to emerge from Chapter 11. We are confident that there will be an orderly transition and will now focus our efforts on establishing an emergence management team that will lead Kmart beyond its Chapter 11 cases and implement the five-year business plan approved by the Board earlier this week and which will be publicly filed in our Disclosure Statement and Plan of Reorganization on or about January 24, 2003.”
Successors to these executives will be named in due course.
In a related action, Kmart said that it was making written demand on all recipients of the 2001 special retention loans to repay the loans to the Company. Kmart said that the stewardship review undertaken by the Audit Committee of the Board of Directors, with the participation and cooperation of the statutory committees appointed in the Company’s Chapter 11 case, had developed credible and persuasive evidence that the 2001 special loan program had been established without appropriate disclosure of material information to the Board of Directors by former members of executive management. The Company said that it expected to include information regarding the stewardship review in the Disclosure Statement that is currently scheduled to be filed with the Bankruptcy Court on or about January 24, 2003.
