Hechinger Co. wants to pay about $10 million in incentives to key executives and store staffers, saying its bankruptcy reorganization has had a "devastating" impact on employee morale and retention.

The home-improvement chain last week asked U.S. Bankruptcy Court in Delaware for permission to offer a new retention plan to selected executives and employees at 117 Hechinger, Builders Square and HQ-Home Quarters stores that are to remain open.

"Absent approval of the [incentive] plans in the near future, there exists a high probability that a substantial number of employees, particularly those working at the store level, may terminate their employment," the Largo retailer told the court.

Under the proposal, top executives, including new chief executive Richard J. Lynch Jr., would receive bonuses this fall and next year totaling up to 61 percent of their annual salaries.

Selected store staffers would receive payments worth 10 percent of their yearly wages. About 1,300 employees--or one in 10--would get retention bonuses, assuming no further cutbacks in the company's work force, Hechinger said.

Hechinger also would pay certain employees for part of their unused vacation and compensatory time.

Company officials say they are now focusing on Hechinger's core operations and are developing a reorganization plan that will make the retailer a viable competitor in the home-improvement industry.

"Accordingly, we believe it is necessary to adopt a retention program for those employees crucial to this effort," Lynch said.

After years of losing sales and shoppers to Lowe's Cos. and Home Depot Inc., Hechinger filed for Chapter 11 bankruptcy protection from its creditors in June.

The ailing retailer has announced the closing of more than 100 stores, mainly unprofitable Builders Square outlets.

Also among stores closed or awaiting closure are Hechinger outlets in Gaithersburg, Temple Hills and Glen Burnie.

Since June 1, Hechinger's employment has dropped dramatically, from 24,500 full- and part-time employees to about 12,300.

The decline is attributable mostly to store closings, but Hechinger also has lost some key employees from the 117 stores that will remain open.

Hechinger said about 13 percent of its regional managers and 22 percent of its store managers have left the company since it filed for bankruptcy protection. The company now has its third chief executive in less than a year.

"Understandably, employees have significant anxiety relating to job security and compensation," Hechinger said in court papers.

Some former Hechinger employees say that morale problems stem in large part from the way store workers were treated in the past.

In an earlier round of store closings, the company promised severance packages and vacation pay to employees who agreed to work through the liquidation sales. But Hechinger told workers at the 34 stores, mainly Builders Square outlets, that it could not pay up because of its bankruptcy filing.

"I'd be very wary" of Hechinger's promises, said Thomas Kilroy, who worked at the Builders Square store in Rocky River, Ohio, until it was closed in June.

Kilroy is among 400 employees now petitioning the court for payments.

The Ohio law firm handling the case has requested class-action status for the former workers.