The bonus to the CEO, Driscoll, was while the company wasn't shutting down, and was likely to try and retain him. He got no stock options or similar items. And the reason to retain him (and I'm not at all convinced he's solely at fault) is so you don't have a sudden change of leadership when your company's about to die. But that's a moot point.
Also, the figures given in the bakery worker's account don't jive with figures given for, say, what the Teamster's union agreed to.
The figures I've seen state that, for 9-10 different executives, the combined total of the bonuses (paid to keep them around while the company liquidates, which is by no means an instant process) is less than $2million. So, again, if you double that, it's 4/10 of 1%. And it's the "please stay here and actually help sell this off".
As for why they didn't modernize, I don't know. It's likely that a fair bit was mis-management. But some of it was, perhaps, a struggle with the daily costs of the business vs. the cost of upgrades. I don't have their financial reports, as they aren't a publicly traded company.