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Court approves bonuses for Delphi execs
Brett Clanton / The Detroit News

A federal bankruptcy court on Wednesday approved an extension of a multi-million dollar bonus plan for senior executives at auto supplier Delphi Corp. over the objections of labor unions representing the company's 33,000 U.S. factory workers.

The bonuses, which Delphi argued are needed to retain key employees, will go to 467 executives at the company's Troy headquarters if earnings targets are achieved in the second half of the year.

In February, U.S. Bankruptcy Judge Robert Drain approved similar payouts to those executives for hitting performance goals in the January-to-June period. Delphi estimates bonuses for that period will amount to $38 million.

While Delphi recevied approval for bonuses through the end of the year, it did did not win permission for a key piece of its motion on Wednesday. Instead of the bonuses automatically renewing at the end of each six-month period, Delphi will have to get court approval every six months to extend the plan.

The United Auto Workers and five other unions vigorously objected to the bonus plan's extension, warning it could distract from negotiations over pay and benefit cuts Delphi is seeking as part of its reorganization.
The unions also opposed Delphi's request to lower earnings targets in the second half of the year to reflect "seasonal variations" in the supplier's business.

In an objection filed prior to the Wednesday hearing, the UAW called the bonuses an "excessive" and "imprudent" use of company assets at a time when it is asking hourly workers to make sacrifices.

Drain, however, ruled Wednesday that the bonus plan was not out of line with what Delphi's competitors offer, and a reasonable incentive to keep corporate officers from leaving.

Delphi spokeswoman Claudia Piccinin said the company was pleased with the court's decision.

"We consider the annual incentive plans to be an integral part of implementing our competitive compensation plan for our workforce," she said. "This brings our executive compensation opportunities to competitive levels."

Roger Kerson, spokesman for the UAW, Delphi's largest union, declined to comment on the court's decision.

Delphi filed for bankruptcy in October after failing to win concessions from its unions and bailout money from General Motors Corp., which spun it off in 1999. The maker of everything from steering components to satellite radios aims to emerge from bankruptcy by next year.