With its stock trading at around 16 cents per share in the midst of bankruptcy proceedings, the executives running Delphi Corp. (OTC: DPHIQ) decided it was time to pay themselves a bonus.
The New York Times' Gretchen Morgenson summed it up this way: "Even as it asked workers, creditors, and owners to accept big losses, Delphi requested a lush executive pay package that included $87 million in cash bonuses to be paid to top managers upon the company's exit from bankruptcy. It was a wonderful example of unshared sacrifice that has become deplorably common in corporate America."
Thankfully, those of who support cutting back on the outrageous sums paid to managers have a new hero: federal bankruptcy judge Robert D. Drain refused to OK the reorganization plan unless the pay package for the executives was cut back to $16.5 million.
It's hard to imagine that the company's top executives thought they should take home such a huge package while creditors and workers got stiffed. Somehow they'll have to survive on $16.5 million.
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Reader Comments (Page 1 of 1)
1-27-2008 @ 4:02PM
Tracy Coenen said...
It is common for corporations going through bankruptcy to offer bonuses to managers and executives to stay on through the bankruptcy proceedings. It is incentive pay to keep the people that are needed to help the company come out of bankruptcy... otherwise they might as well go look for new jobs and leave the loser company behind. I'm not justifying "excessive" bonuses (whatever those might be)... just saying that there is a good reason to give management bonuses following bankruptcy and it is a common practice.
1-27-2008 @ 4:36PM
Boards0000000 said...
If the company is in bankruptcy I don't think it justifies giving the managers any bonus. Aren't they the ones who managed to take it down to bankruptcy? Let the managers go empty handed and hire new ones at reasonable salaries so they can grow the company instead of taking it down with huge salaries.
1-28-2008 @ 7:11AM
Tracy Coenen said...
Unfortunately, a company in bankruptcy isn't going to be the first choice for most job-seekers. Whether they like it or not, those management employees are needed to see the company through the bankruptcy. If they leave, the company goes under and all creditors get NOTHING.
3-31-2008 @ 11:49AM
RJ said...
These Delphi executives ought to live by what THEY tell their employees - Be glad you have a job.
Some of these guys are so bad nobody else would want them anyway.
They have a job. They didn't take wage or benefit cuts. Why should they leave?
They want to live the high life off the backs of their employees.