It has been discovered that just a mere 12 months before filing for
Chapter 11 bankruptcy, Reader's Digest paid more than $28 million to executives, directors, and other "insiders."
The company, which according to its bankruptcy filing was struggling under $2.2 billion in debt, paid a total of $28.5 million to 54 "insiders," which includes directors, officers, executive committee members, or holders of at least 5 percent of the company's equity.
The $28.5 million includes $3.3 million to Mary Brenner, the company's president, director, and chief executive. The second top-earning executive was Suzanne Grimes, president of the company's unit that publishes food and entertainment magazines. Grimes was compensated $1.16 million. The company's Chief Financial Officer, Thomas A. Williams, came in third, having been paid $1.2 million. Six other executives were paid between $770,000 and $1 million.
The findings were made public after the company filed a financial report with the bankruptcy court.
A representative from the company was has yet to comment on the matter.
Other entities that received money from Reader's Digest include 54 recipients, 51 individuals, and three asset management firms. The firms received $4.5 million in management fees.
The company ran its debt up further by paying out $26.1 million to 10 firms for bankruptcy and debt-related services. These firms were paid before the company filed for bankruptcy.
In addition, Reader's Digest donated more than $158,000 to 123 charitable organizations, including the Boys and Girls Club of America, Ronald McDonald House, United Negro Fund, and Hudson River Museum.
Reader's Digest is another example of a multi-million company seeking bankruptcy protection, despite having paid its top executives millions of dollars.
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