UK lawmakers push struggling Toys ‘R’ Us on executive payouts

Bloomberg

Toys ‘R’ Us Inc.’s British unit, which is at risk of collapse, faces questions from lawmakers about a reported surge in payments to its former managing director.
The loss-making British arm of the US toy retailer boosted Roger McLaughlan’s pay to 1.3 million pounds ($1.7 million) in the year ended on January 30, 2016, from 1 million pounds and 356,000 pounds in the previous two years, Frank Field, the chairman of the House of
Commons’ Works and Pensions Committee, said in a letter to Toys ‘R’ Us UK’s current head, Stephen Knights. The letter, which was posted on a parliamentary website, cited a Daily Telegraph report.
Field asked how the increases were justified at time when the UK business had “substantial” operating losses and a “sustained deficit” in its pension scheme.
He also asked how the retailer
decided the division of resources between executive pay and topping up its pensions pot.
The questions add to pressure on Toys ‘R’ Us UK management as they struggle to reach a deal with a pension bailout fund ahead of a key creditor vote on Thursday. Pension Protection Fund has said it is voting against the retailer’s restructuring plan, which centers on shutting at least 26 stores, potentially scuttling the proposal. The retailer has said defeat will likely lead to administration or insolvency.
A spokesperson for Toys ‘R’ Us UK couldn’t be immediately reached for comment on the letter.
Toys ‘R’ Us, the Wayne, New Jersey-based parent company, filed for court protection in the US a few months ago after struggling with online competition and debt from a $7.5 billion leveraged buyout in 2005. US same-store sales fell 7 percent from a year earlier in the three months ended on October 28, the company said.