Monday, February 13, 2006

Ruling Class Still Rules

Judge OKs bonus plans for Delphi execs
Associated Press

A federal bankruptcy court judge Friday approved Delphi Corp.'s plan to re-institute a bonus program for its top executives despite criticism from the bankrupt auto parts maker's creditors and the unions that are fighting job cuts at the company.

U.S. Bankruptcy Judge Robert Drain approved awarding up to $21 million to the company's executives in a six-month incentive plan, one of two bonus programs that were dropped when the company filed for bankruptcy protection in October. A longer-term incentive plan remains shut down.

Delphi attorney Jack Butler said re-instituting the plan, which would expire June 30, would allow the company to keep important executives through the bankruptcy restructuring process. However, Drain's decision also raised the possibility of deepening labor unrest that could lead to a strike by Delphi unionized workers.

Delphi's move to reinstate the bonus plan had been roundly criticized by Delphi's workers, who are up against a Feb. 17 deadline to either negotiate steep wage cuts with Delphi, or face the possibility of having their collective bargaining agreements voided by the bankruptcy court. After that, Delphi could unilaterally impose salary cuts or slash jobs.

The timing of Delphi's plan also was harshly criticized by both the court-assigned bankruptcy trustee and Delphi's unsecured creditors committee, both of whom otherwise supported the plan's structure and payments.

"Our conclusion is that it is not a reasonable exercise of business judgment to go forward with an executive compensation plan one week before a motion (to abrogate collective bargaining) dealing with one of the main issues of this case, which is labor peace," said Robert Rosenberg, the attorney representing Delphi's creditors.


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