In every corner, greed continues to amaze. Please consider Bankrupt suppliers seek exec bonuses.
A growing number of bankrupt auto suppliers are seeking court approval to pay tens of millions of dollars in bonuses to key executives, as they shed employees and cut costs.
Some of the bonuses have come under sharp criticism from General Motors Co. and Ford Motor Co., as well as the trustees named by the Justice Department to monitor bankruptcy cases.
“Considering the condition of the automotive industry and the adverse effect on auto suppliers, it is unclear why payments are even needed to retain employees who may have limited options to find employment elsewhere,” said Diana G. Adams, the U.S. trustee in objecting to a plan by Lear Corp.
Southfield-based Lear, which is in the process of cutting costs by $350 million, won approval Tuesday to pay $20.6 million in bonuses to 29 execs.
Congress rewrote the bankruptcy code in 2005 in an attempt to prevent executives from rewarding themselves during bankruptcy, while rank-and-file workers make significant sacrifices.
Yet Visteon, which sought bankruptcy protection on May 28, wants to give bonuses of up to $80.1 million to top execs — as much as 250 percent of base pay, for some of them.
Ford, in court documents, said it “cannot see how, in a market with mass layoffs, salary reductions and bonus program curtailments occurring daily, anyone can justify a bonus program of $80.1 million when job retention should be enough.”
And Northville-based wheel producer Hayes Lemmerz International Inc. wants permission to pay more than $10 million in bonuses, including as much as $6.7 million to its top five execs.
Just Friday, however, Hayes proposed canceling its retiree health and life insurance coverage for households covering 2,200 families.
Hayes has proposed creating a Voluntary Employee Beneficiary Association, which would allow retirees who are ineligible for Medicare to keep coverage at a cost of $900 to $2,100 a month. Hayes would contribute as much as $4.8 million over four years to cancel its accrued liability of $147.5 million.
That last paragraph takes the cake. Hayes would “allow” retirees to keep medical coverage for a mere $900 – $2,100 a month from a “voluntary beneficiary association”. How generous.
Apparently that kind of creative thinking entitles Hayes executives to receive $12 million in bonuses. In the Visteon case, the bankruptcy judge is balking.
If I was a bankruptcy judge, I would award bonuses of zero for any company with enough gall to ask for millions in bonuses for the very executives that drove the companies into the ground.
Hays, Lear, and Visteon say bonuses are necessary to keep key executives. I suggest there is not a single key executive at any of those companies.
Mike “Mish” Shedlock
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