Sears board members gain $600K as former employees fight for severance pay

CTV National News: 'I think it's disgusting' Sears Canada's board of directors is under scrutiny as laid-off employees struggle to collect what they're owed. Omar Sachedina reports.

New documents released from the ongoing legal case against Sear Canada reveal that the remaining members of the board have earned more than $627,000, and incurred $629,000 in legal and financial advisor fees so far this year.

The numbers were brought to light in a July 13 motion filed by Erin Epp, of legal firm Ursel Phillips Fellows Hopkinson LLP, who represents former employees of the company, calling for a court order to dissolve the Sears Canada Board of Directors.

Although Sears Canada closed their last stores back in January of 2018, four board members have stayed on to guide the company during its insolvency process.

The motion says that with the majority of the process completed, having gone through liquidation and second liquidation, and with limited employees and only eight pieces of retail property left to sell, any remaining decisions can be made by the monitor company, FTI Consulting Canada.

"The continued cost of the Directors is an unnecessary expense to the estate and as such the Directors should be removed," the affidavit states.

It's an argument that resonates with many of the 17,000 laid-off employees, who are still fighting to receive the money they're owed in severance and pensions.

"I think it's disgusting," said former Sears employee Marilyn Martin. "I have very close friends that I've made over the years at sears that are fighting for their pensions that they paid into."

"I had plans to do things with my pension -- retire in the next few years now it's not in my cards," said Helen Brisson. "Right now this is very worrying for me and my family."

A former manager with almost 30 years with Sears, Brisson says that she received a letter in March regarding her compensation, but hasn't heard a word since.

Now, she says she just wants to get back what she put in.

Brisson says she's heard the rumours that former employees might get 10 cents on the dollar of what they're owed, while not receiving the 19 per cent that Sears put in to match employee pension contributions.

"At this point I just want to see results -- this has been going long enough," Brisson said.

Even Sears Canada's former CEO is upset by the news.

"These folks lining their pockets with real cash in a business that didn't have that cash available," said Mark Cohen in a Skype interview. "This is nothing short of outrageous."

That argument is the crux of the filing by Epp. She says that continuing to pay the board of directors and their legal representatives is an unnecessary drain on the remaining assets of Sears Canada -- money which should be going to creditors.

The balance of the Sears estate was $126.2 million as of April 28, 2018, according to a report released by the Monitor – a small amount in comparison to the amount of outstanding claims against the company.

Graham W. Savage, the director of Sears Canada since 2015, responded to the claims in a motion filed July 23, saying that the board has been "heavily" involved in all aspects of the insolvency process, working to maximize value and act in the best interests of the company.

Savage says he and Deborah Rosati, Raja Khanna, and Heywood Wilansky, who make up the remainder of the board, bring "an extensive and diverse set of corporate governance skills and experience to the company."

The court documents also reveal that the board members are prepared to reduce their pay to $5,000 a month, which Savage says they have already reduced twice as the process has unfolded.

The board will also be reducing the number of its meetings held from weekly or biweekly as necessary. While the directors don't charge a meeting fee, external advisors that attend meetings can bring with them associated costs, Savage said.

Despite the filing, analysts say that it's unlikely that the board will be disbanded.

"[It is] very rare to see someone be removed because there is no indication that there has been something wrong or not appropriately done," said University of Ottawa Business professor Gilles LeVasseur.

Lawyers for the board of directors refused to comment on the case to CTV News.

With a report from CTV News' Omar Sachedina