http://money.cnn.com/2006/05/11/news...uses/index.htm

Delphi to pay $60M in new exec bonus plan
Bankrupt auto parts maker, which is demanding 40% pay cut from union workers, unveils plan to pay 14,000 managers bonuses; top execs already expected to see another $36M.
By Chris Isidore, CNNMoney.com senior writer
May 11, 2006: 3:05 PM EDT

NEW YORK (CNNMoney.com) - Bankrupt auto parts maker Delphi is seeking permission to pay about $60 million in bonuses to its white-collar employees, at the same time it is trying to cut the pay of its union-represented workers by about 40 percent.

The request for performance bonuses to its 14,000 salaried staff was disclosed Wednesday in the middle of a three-day bankruptcy court hearing set to conclude Thursday.
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The company is in court seeking to get authority from bankruptcy judge Robert Drain to dump its contracts covering 33,000 unionized workers, saying those labor costs are not competitive. The unions are challenging that motion and threaten to strike if their contracts are voided. A strike could be a crippling blow to the prospects for embattled automaker General Motors (Research), which is already in negotiations with the unions and Delphi to find an agreement at its former parts unit.

Delphi (Research) said it hopes to reach a negotiated settlement with the union on the pay cuts and plant closings, rather than have them imposed in bankruptcy court. But the increased pay to executives could make it more difficult to win rank and file approval of any cut, and could lead to a strike or perhaps even a series of non-authorized "wildcat strikes" by union workers at Delphi.

The $60 million payments to the salaried staff comes in addition to the $36 million in performance bonuses that have already been approved for Delphi's top 500 executives. All the payments would be based upon the company's and individual executives' performance during the first half of 2005.

"There's never a good time when talking about incentive bonuses when you're restructuring," conceded Delphi spokeswoman Claudia Piccinin. Still she defended the pay proposals as justified by the current labor market, and by the fact that the company has not paid the performance bonuses since 2002.

"Our hourly work force is being paid above what competitors are paying. They've received increased compensation in recent years," said Delphi spokeswoman Claudia Piccinin. "By contrast our salaried work force is paid at or below our competitors. We've seen increased turnover of salaried staff since we filed for bankruptcy."

A GM spokesman had no comment on he Delphi plan. UAW officers did not make or release any statement on the latest Delphi bonus plan. Union spokesman Paul Krell said Thursday afternoon the union has been consistently opposed to such plans since Delphi filed for bankruptcy court protections on Oct. 8.

"We've consistently said they are inappropriate, unjustified and disgusting. We've filed motions that are very strongly opposed to them," Krell said.

But Krell would not comment on what impact the bonus plan might have on negotiations between the union and Delphi, or upon rank-and-file acceptance of any negotiated settlement that might be reached.

Industry observer Robert Farago, publisher of TheTruthAboutCars.com, said the lack of public statement by UAW leadership isn't necessarily good for Delphi-union relations.

"Maybe the leadership is playing nice, but it's a slap in the face for the rank and file," he said. "They've got to be furious. The silence of leadership does not bode well. It's like putting a lid on a pressure cooker."

A Delphi strike would almost certainly shut production at the North American plants of General Motors, which spun off Delphi into a separate company but still uses it as its primary supplier. Many experts believe a long shutdown at GM could force the embattled automaker to follow Delphi into bankruptcy court itself.

Shares of GM, which had seen almost a 30 percent gain since it reported better-than-expected first quarter results April 20, saw its shares down 4 percent in trading Thursday on reports about the Delphi pay plan.

Unlike the pay for top executives, the salaried staff's incentive bonus program does not need the bankruptcy court's approval, Piccinin said, because the company had made payments under the plan in previous years.

Piccinin said that the company would not need to be back in the black to pay the bonuses, only that it needs to trim losses before items such as depreciation, interest, taxes and restructuring costs to $80 million for the executives to get the payment. The company reported an operating loss of $608 million for the first six months of last year in its 10-Q report filed in August 2005.

Piccinin said improved results at Delphi has put the company on track to meet its goals and make the payments if current levels continue over the next two months.

Still Delphi officials argue that it can't compete long-term without a significant change in its labor cost structure.

It has been demanding that unionized workers cut their pay by 19 percent immediately to $22 an hour from $27 they are now paid. It also is demanding pay be cut to $16.50 an hour in September 2007, when the current labor deal is set to expire, although it would offer a $50,000 payment to workers next fall to get them to accept that final pay cut.

 

While I agree that the steps with the Union are needed; the Exec's should in no way be getting bonuses with the situation they are in???

Sounds like a bunch of Power-Hungry people trying to set themselves good before the whole company crashes... BS.

 

Because a Delphi Executive can walk and and find a job at a company that isn't bankrupt and about to fire a bunch of people and break their union.

 

it almost seems like delphi wants the union to strike

 

Dang right they do.

Everybody up top gets rich, Delphi goes belly up, booya!

Think any investigation will follow from the gov't? lol

 

Are they trying to **** people off? Its almost like they are doing it on purpose. Who pissed in whos frosted flakes?

 

hard to believe but how else are you going to keep qualified management at a company that is in bankruptcy? you can't recover to profitability when all of your good management take a hike to different companies.

 

They have good management?

Personally I wouldn't want anyone to stay that isn't commited to turning the company around. If it takes extra cash to keep them from quitting, and thats the only reason they're still there, I'd go ahead and let them go, because you've already lost their best efforts.

 

Qualified management? You mean management that doesn't drive the company into bankruptcy???


This whole Delphi management, especially on the top barely goes a couple of weeks without doing something new to utterly disgust me. $10 per hour union demands, forcing then undermining General Motors efforts to work out a deal, and now an addition $60,000,000 in executive bonuses that are NOT ties to company profitability. This whole hairbrianed proposal actually dropped GM's stock value by 4%!


I really wished GM management of the late 90s had the forsight to had written into the spinoff the right to fire Delphi management or retake the company under certain conditions. It's a crying shame that at the moment GM becomes profitable for the 1st time in a year and a half, and just when GM is starting to turn out vehicles to be proud of, a bunch of executives at a supply company wanting to line their pockets, destroy the UAW, and shut down all US plants is poised to destroy GM, and likely create a long term US recession in the process.

Simply disgusting.

 

If I was GM I'd be in serious talks with Bosch RIGHT NOW.

 

I think giving the execs bonuses and such is just thier own way of padding thier pockets at the expense of thier workers.. I could maybe see it if they actually did a good job, but that are in bankruptcy... Obviously the top people there were not doing that good of job.

 

The big question is how do these people walk with ***** so big?

 

i hardly think all 14,000 managers who will be getting the bonuses have much to do with that the upper management has decided to do as of recently, and even if they did would it be better off they all start to quit with no one to replace them? after all, its pretty difficult to find 14,000 managers who are willing to sign on to a company which is in as bad of shape as delphi.

the bonuses to the 14,000 managers is to keep them around and not a "good job" pat on the back. do not confuse these 14,000 with the ones at the top making news and dealing directly with the heads of the UAW while making $10 per hour demands.