Neiman Marcus CEO Geoffroy van Raemdonck (Photo by Pascal Le Segretain/Getty Images for The Business ... [+] of Fashion)

During the Covid-19 pandemic, we saw over 3,600 corporations file for bankruptcy protection. These companies include iconic American brands, such as J.C. Penney, Hertz, J. Crew,

Pier 1, Brooks Brothers and Neiman Marcus. Many of them attribute their dire situations to the virus outbreak. It's a convenient scapegoat that deflects the blame. The reality is that a majority of companies were mismanaged, piled on too much debt, engaged in stock buybacks that left them without emergency funds, paid their CEOs and executives lavishly and were not in sync with their customers nor innovated to stay current with the changing climate and trends.

According to Reuters, a large number of the big companies that sought out bankruptcy protection awarded millions of dollars in bonuses to their executives within months before filing. Their reporting shows that a number of companies, including J.C. Penney and Hertz, approved bonuses as few as five days before seeking bankruptcy protection. This may be due to a 2005 bankruptcy law that prohibits companies from paying executives retention bonuses while in bankruptcy. This prepayment looks like exploiting a loophole.

After over 100 years in business, the once-beloved retailer, J.C. Penney, filed for bankruptcy protection and paid out millions of dollars to top executives right before it happened. In a regulatory filing, it was disclosed that J.C. Penney CEO Jill Soltau received a $4.5 million bonus. Three top executives, including chief financial officer Bill Wafford, chief merchant officer Michelle Wlazlo and chief human resources officer Brynn Evanson each received a $1 million payout.

Hertz, the well-known car rental company thats been an enduring American fixture at airports, handed out over $16 million in bonuses days before filing for bankruptcy. Hertz paid a $700,000 bonus to chief executive Paul Stone. Chief financial officer Jamere Jackson was awarded $600,000 and chief marketing officer Jodi Allen received $189,633, according to the Wall Street Journal.

Your fondly remembered childhood pizza and arcade game emporium, Chuck E. Cheese, filed for bankruptcy. The go-to birthday party place for kids CEO David McKillips lamented that the pandemic period has "been the most challenging event in our company's history." However, McKillips is "confident" about its future. He should be, as McKillips was personally taken care of. Despite the challenging times ahead, the company gave around $3 million in retention bonuses to its three top executives before the bankruptcy was announced. McKillips received $1.3 million, President Roger Cardinale got $900,000 and CFO Jay Howell was awarded $675,000.

Shopping-mall mainstay GNC paid out about $4 million in cash bonuses to top executives, prior to its Chapter 11 filings.The rewardsofficially called retention bonusesfor failing included $2.2 million for CEO Kenneth Martindale, who joined the company in September 2017. He was paid $7.1 million in 2019. The chief financial officer received $795,000 and three other C-level executives were awarded a total $918,000.

Despite the decreasing fortunes of large oil and gas producer Chesapeake Energy, CBS News reported that last year its CEO, Doug Lawler, remained the highest-paid CEO in Oklahoma with $15.4 million in compensation. Prior to filing for bankruptcy, the Wall Street Journal reported, Chesapeake also offered 21 high-ranking employees cash-retention payments totaling about $25 million. According to Equilar, Lawlers realized pay through the end of last year totaled more than $48 million.

Upscale-clothing retailer Neiman Marcus is requesting a federal bankruptcy court in Texas to allow about $10 million in pay raises for CEO Geoffroy van Raemdonck and other executives. The compensation is said to be critical to day-to-day operations and will ensure the companys success during the bankruptcy process.

Bloomberg estimates, Out of the 100 companies that have filed for bankruptcy since the Covid lockdowns began, 19 of these companies have committed to paying a total of $131 million in retention and performance bonuses.

The usual excuse is that the management team needs to be financially taken care of to shepherd their companies through the arduous bankruptcy proceedings. They claim that the bonuses could be clawed back under certain circumstances, but that rarelyif everhappens.

Outside observers understandably question the legitimacy of costly retention bonuses, as it's going to the very same management groups that got their respective companies into these messes. Critics also point to the fact that workers are laid off by the thousands and not afforded any enhanced packages. These are the rank-and-file folks who roll up their sleeves and do all of the heavy lifting, interact with customers and are the lifeblood of the companies.

To be fair, running large, diversified global businesses is not easy. Doing this during an unprecedented pandemic is excruciatingly hard, especially if youre in a sector that depends upon human-to-human interactions or were forced to shut down due to the federal and state mandates. It's reasonable to compensate management fairly for their efforts, as well as the anxiety and uncertainty they face.

What infuriates people is that the companies clearly have a two-tier system: the senior executives and CEOs are financially looked after, whereas the average worker is not taken into consideration. Arguably, the top brass have the financial wherewithal to weather the storm and have accumulated enough contacts and connections to land on their feet somewhere else in a high-end, cushy role.

The average worker at a company that is going through bankruptcy confronts a different reality. Theyre unceremoniously tossed out into a cruel and unforgiving job market, in which 51 million Americans have recently filed for unemployment. The competition for a new job is ridiculously competitive. There are hiring freezes and layoff announcements on a nearly daily basis.

The oversized bonus rewards could almost be tolerated if the same consideration was offered to their workers too. Until this happens, confidence in our capitalistic system will continue to erode. The average American will feel that it's rigged against themfavoring the rich and powerful and ignoring the hardworking middle and working classes.

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CEOs And Executives Of Companies Filing For Bankruptcy Make Millions - Forbes