Delphi Seeks to Pay Up to $37.6M in Executive Bonuses

WASHINGTON September 12, 2007; The AP reported that auto-parts supplier Delphi Corp. is seeking approval from the bankruptcy court to pay up to $37.6 million in bonuses to more than 400 executives for the second half of 2007.

Delphi said the bonus plan, which covers most executive-level employees, brings compensation in line with industry standards. This is Delphi's fourth request to pay incentive-based bonuses under a plan first approved by the bankruptcy court in February 2006.

The executive bonuses sought by Delphi are tied to the executives' performance between July 1 and Dec. 31. Chairman Robert S. "Steve" Miller isn't eligible for a bonus, according to papers filed with the U.S. Bankruptcy Court in Manhattan Friday.

The executive bonuses are tied to Delphi's achievement of certain financial targets. Payments under the plan will be made if Delphi records pretax income of $443.1 million or its business units achieve certain operating income targets. The bonus pool would top out at $37.6 million.

Delphi, based in Troy, Mich., said the bonus plan provides executives "with appropriate incentives to achieve (its) interim corporate- and division-level financial targets." As of July 1, 442 Delphi executives were covered by the proposed bonus plan.

Delphi said the committee representing its unsecured creditors supports the bonus plan. The company's past requests to pay bonuses to its top workers, however, have met with sharp criticism from labor unions representing rank-and-file workers. Delphi recently inked new labor contracts with all of its unions, an important step on its path to exit bankruptcy protection.

A court hearing on Delphi's request is scheduled for Sept. 27.

Delphi, the former parts division of General Motors Corp., has been in bankruptcy since October 2005. The company aims to exit bankruptcy by the end of 2007 under a reorganization plan filed last week funded, in part, with $2.55 billion from a group of investors led by hedge fund Appaloosa Management LP.

The company, which is the midst of cutting 8,500 salaried positions worldwide, plans to focus on six key business lines and keep eight U.S. union plants open. It's selling or closing 25 sites in North America.