Revlon set to pay executives $53 million in bankruptcy bonuses

Revlon’s plan to give bankruptcy bonuses to its top executives won approval by a federal judge despite opposition from the US Justice Department’s watchdog.

Revlon’s chief executive officer Debra Perelman, who has held the position since 2018, could collect as much as $US10.6 million ($15.7 million), the company said in court papers seeking approval of the bonus program. Under the proposal, eight senior executives would receive as much as $US36 million ($53.4 million), should the company hit certain financial and other metrics.

Revlon’s chief executive officer Debra Perelman, who has held the position since 2018,  could collect as much as $US10.6 million.Credit:AP

The proposal has the backing of various creditor groups, including the official committee of unsecured creditors.

Brian Masumoto, the US Trustee representative in the case, argued that the bonuses are the company’s attempt to retain senior executives rather than to incentivise them to work harder.

US Bankruptcy Court Judge David S. Jones in Manhattan disagreed. “In fact the metrics imposed are indeed tall orders and serious challenges for a business in the posture that the debtor finds itself in,” Jones said in his ruling Wednesday.

Under the approved plan, the executives would earn the incentive payments if the cosmetics company meets financial targets that are harder to hit than in previous years. Revlon’s lawyer Robert Britton argued that the targets are “far from a layup” and the bonuses will motivate the executives to “do more than just show up to their jobs” to achieve them.

Revlon filed for bankruptcy in June as the global supply chain crunch squeezed the debt-laden company while it struggled to tap into a broader cosmetics sales boom driven by social-media influencers.

The 90-year-old company got its start selling nail polishes in the throes of the Great Depression, and later added coordinated lipsticks to its collection. By 1955, the brand was international.

The bankruptcy caps a tumultuous period for the company, which suffered during the pandemic and faced years of declining sales as consumer tastes changed and upstart brands ate into its market share. More recently, the company said supply-chain pain and inflation were challenging its ability to keep up with rebounding consumer demand.

The company has long struggled with a burdensome debt load, even dating back to when Perelman’s father Ron bought it in 1985, when he was just 42. The contested takeover led him to raise his price several times, eventually paying $US2.7 billion including debt in a deal financed by Michael Milken’s junk bond powerhouse Drexel Burnham Lambert.

The 90-year-old company filed for bankruptcy earlier this year.Credit:AP

While other companies, such as Marvel, went bankrupt under Ron Perelman’s ownership, he remained committed to keeping Revlon solvent, deploying clever and increasingly complex strategies to squeeze out cash from other corners of his empire to stage a rescue.

In 2003, he stepped in with a promise of cash from his holding company, MacAndrews & Forbes, to stop Revlon from defaulting as it wobbled under $US2 billion in debt. Many similar infusions took place, including from Perelman family foundations and his father.

The company’s debt load proved burdensome, especially after it sold more than $US2 billion of loans and bonds to fund its acquisition of Elizabeth Arden in 2016. It also owns brands including Cutex and Almay, and markets in more than 150 countries.

In recent years, Revlon has struggled to compete with newer brands and those owned by rivals L’Oreal SA and Estee Lauder Cos. that have turned to video bloggers and Instagram personalities to fuel growth. The pandemic provided another blow to sales.


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