The US Bankruptcy Court has approved Footstar Inc's plan to improve compensation packages for its executives.

According to court papers relating to Footstar's Chapter 11 case it has been given the go-ahead to spend $8.8 million in bonuses.

Footstar said in the papers quoted by Dow Jones Newswires that its executives were "seriously concerned" about the company's future and their future prospects within it.
 
The executives' concerns relate to litigation being played out between Footstar and Kmart Corp, the result of the which will decide the future of the companies' licensing deal and subsequently the existence of Footstar's Meldisco division, which operates footwear departments in Kmart's stores.

Since Footstar filed for Chapter 11 protection in March this year, the company has disposed of most of its assets, mainly retaining those related to Meldisco.

Kmart has since given rise to speculation that it plans to cut down its store chain considerably, which would also adversely affect Footstar and its remaining subsidiaries.

The bonus scheme is intended to act as a retention program to keep key employees. Footstar will pay bonuses to around 240 employees in a scheme expected to cost the company $3.5 million.