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To: Glenn D. Rudolph who wrote (142067)	5/3/2002 9:11:57 AM
From: Bob Kim	Read Replies (1) \| Respond to of 164684

One should be enough for Sheryl. What about Carolyn? She'll be 21 when HJ is 42.

To: Glenn D. Rudolph who wrote (142067)	5/3/2002 10:10:48 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

>>One should be enough for Sheryl. << Cheryl left me and ran away with Mary Meeker.;)

To: Glenn D. Rudolph who wrote (142067)	5/3/2002 10:36:55 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Glenn, if I come to work for you what kind of severance payments and loans can I expect to get? >>May 3, 2002 CHICAGO – Kmart Corp.'s board of directors is investigating possible wrongdoing by former senior executives and said it has suspended severance payments and will not forgive millions in loans until the probe is completed. The loans were doled out in the months right before Jan. 22, when Kmart filed for bankruptcy, the largest retail reorganization in history. The board's so-called stewardship review is focused in part on $30.1 million in loans given to nearly 70 top-level employees including Chuck Conaway, who was chief executive officer. Kmart's use of corporate jets is also under review. Kmart's bankruptcy attorney, Jack Butler, announced the review at a meeting in Chicago with the retailer's creditors, who have been angry about Kmart's plans to give Conaway and other executives millions of dollars in bonuses and severance pay. The investigation into management practices comes a day after Kmart said it would restate its 2000 profits and delay the release of its 2001 results until May 15, with heavier losses than expected. Experts say the management review could open up a "can of worms" and is not a good sign for the retailer, coming after Kmart said it needed more time to file its annual financial report with the Securities and Exchange Commission. Kmart said the review of the company's accounting methods had delayed the release of the report. The company also said it may overhaul its accounting system. "It's the cockroach thing again. If there's one thing wrong, there's lots of things," said Mike Porter, an analyst with Morningstar Inc. in Chicago. "It sounds like it's starting to snowball here. This kind of thing happens all the time – it starts out small." Porter said it appears the board may have "uncovered something that said management was not acting in shareholders' best interest." Conaway lasted less than two years at Kmart and is blamed for several strategic missteps that drained the company of cash and left it millions of dollars in debt and unable in January to pay its vendors. Butler said the review is on top of a company investigation of its accounting practices, which was prompted in part by an anonymous letter in January that alleged improprieties. He said the accounting review was substantively completed, and the management review should be wrapped up by the end of summer. Kmart, with headquarters in Troy, Mich., is trying to get money back from at least one executive who has left the retailer since getting a loan and may require repayment from the others. Kurt Barnard, president of Barnard's Retail Trend Report, said the review of Kmart's stewardship was "unexpected. If there is some reason to suspect that things are not quite what they should be, it could open up a can of worms." Joel Applebaum, a Detroit bankruptcy lawyer, said he believes the review of the loans will focus on who authorized them and the circumstances surrounding the loans. "Were they in fact loans and not some sort of compensation? Was it characterized as a loan to avoid income-tax implications and other taxes?" Applebaum said. Butler said that in the case of some executives, the loans "acted as they were intended to be – as retention loans." For example, Cecil Kearse, Kmart's executive vice president of merchandising, received a loan of $2.5 million and remains in the position. Other executives, including Conaway, former President and Chief Operating Officer Mark Schwartz, former Chief Financial Officer John McDonald and former Executive Vice President of Administration David Rots, got loans and then left Kmart after it filed for Chapter 11. Conaway, who resigned as chief executive officer March 9, may be able to keep his $5 million retention loan because his employment contract said the amount would be forgiven if he left Kmart as a result of a change in responsibilities. Conaway was stripped of his duties as chairman Jan. 11 and replaced by James Adamson, a member of Kmart's board of directors since 1996. Adamson is now also chief executive. uniontrib.com