July 13, 2006

Put Your Company In Bankruptcy, Here's A Bonus

What I honestly don't get is why Delphi executives think they deserve bonuses for putting the company into bankruptcy. I mean shouldn't the executives be held accountable for the company doing poorly instead of rewarding them for the same thing?

The International Union of Electronic Workers-Communications Workers of America is asking the bankruptcy judge in New York to set aside an extension of the bankrupt Delphi Corp.'s annual incentive program for senior executives.

An extension of the bonus program "will anger, humiliate and alienate" Delphi's unionized employees who are coping with a sweeping restructuring that will eliminate more than two-thirds of the company's existing manufacturing jobs. In addition, payment of the bonuses will effectively scuttle union efforts to negotiate modifications in their collective bargaining agreements. The payment of $60 million in bonuses could foreclose any chance of having a new agreements ratified by Delphi's employees, the IUE-CWA said in its court filings.

Delphi has asked the bankruptcy judge to extend the bonus program for the second half of this year and continue as long as the company is in bankruptcy. Judge Robert Drain has scheduled a hearing next week.

Last winter, Drain ruled that Delphi had "exercised reasonable business judgment" when it sought the first program, which covered the first half of the year and was estimated to cost $36.3 million. It implemented the program to bring executive compensation up to competitive levels, according to Delphi, which maintained its executives were underpaid. Delphi lost $2.4 billion last year and has now lost more than $7.2 billion in the past two years.

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Posted by Quality Weenie at July 13, 2006 07:14 AM | TrackBack