Kmart CEO No Blue-Light Special

(AP)  Outgoing Kmart chief executive Julian Day is getting about $90 million in stock options for his 10 months of leadership at the discount chain, which is struggling to remain profitable after emerging from federal bankruptcy protection, according to a newspaper report.

Day resigned Monday to make way for fast-food industry veteran Aylwin Lewis as head of Kmart Holding Corp., but will stay on its board. He retains 778,882 stock options worth about $60 million and fully vested options worth about $30 million.

He also is to get $2 million by signing a release agreement with Kmart and much of his regular $1 million annual bonus for this year. And he will collect bonuses of $978,000 in 2007 and $479,000 in 2008 if Kmart meets goals for the next three years.

Should Kmart stock remain at Wednesday's close of $90.31 per share and the performance goals be met, Day's exit package would total about $94 million by January 2008, according to a story in Thursday editions of The Detroit News.

Kmart earned $155 million for the 13 weeks that ended July 28, compared with a loss of $5 million a year earlier.

Day deserves the money, said retail analyst Ulysses Yannas of Buckman, Buckman & Reid in Red Bank, N.J.

"From heavy losses, he created profits," Yannas said. "Look, it's fair, because when Day took over it was a company in huge trouble, and most people were saying it wouldn't survive."

Farmington Hills compensation expert Kenneth Dalto disagreed.

"It's excessive, especially for a guy that's been in it for a year," Dalto said. "Did he create that much value? Probably not, but that's the deal they struck to attract him."