By on November 20, 2007

irs_logo_3.jpgWhen former GM division and bankrupt parts supplier Delphi tried to get their re-organization plan approved by a federal judge earlier this month, shareholders and creditors panned it. In the last filing, Delphi's top brass wanted to cut the shareholders' recovery from $470m to $69m. The latest revision ups the pay-off to $190m. To make that happen, Delphi looted took money from the right to purchase stock assigned to the United Auto Workers (UAW) and other unions– reducing the UAW's cut by 6.4m shares. Even so, creditors aren't happy with the new plan. But they're caught by the short hairs; they lose everything if Delphi goes under. The clincher: if the new new new plan isn't in place by December 31, Delphi's IRS waiver expires. Delphi would have to cough-up $1.4b for taxes and penalties on pension obligations. Other disclosures from the filing: their legal expenses have topped $320m and could reach as high as $400m. And they're capping the agreement to supplement some long-term employees' retirement plans. Oh, and they're still going to give their top executives at least $216m in bonuses, post-bankruptcy.

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15 Comments on “Delphi Shafts Suppliers, Union; Executive Bonuses Escape Unscathed...”


  • avatar
    mikey

    Lets get it straight,the top dogs with skillfull management run the company to chapter 11.Do that and you get a bonus?
    Suppliers get screwed,along with shareholders,and the workers.
    Silly me,I was under the impression it was the greedy unions fault.

  • avatar
    Redbarchetta

    Is there anyway to get rid of the rot at the top of the companies?

  • avatar
    jthorner

    ” Is there anyway to get rid of the rot at the top of the companies?”

    Unfortunately the only way is for the companies to disappear, but then everyone suffers.

  • avatar
    mikey

    The culture needs to change.I,ve seen incompetant,lazy, and just plain stupid people get promoted.One thing they all had in common was agreeing to every thing thier boss had to say.
    At the same time I,ve seen brilliant young men and women, quit in disgust.
    I don’t know if its true in sucessfull companys but its a way of life at GM

  • avatar
    Redbarchetta

    Unfortunately the only way is for the companies to disappear, but then everyone suffers.

    That is what I thought, I was hoping someone would have a better answer. Any wayt the employees could take back the company from the incompitant management, sort of like Harley did.
    I know it’s wishful thinking, but I was hoping it could be fixed without hurting the hardworking employees who really do all the work and make the comapny function.
    It’s sad the people who really need to be drug through the coals never will and the undeserving will be hurt the most including the rest of us Americans.

  • avatar
    KatiePuckrik

    Corporate America (and many other countries) are the only houses where the rot starts from the stop.

    This is disgusting on a level I’ve never seen before. I can’t believe it.

  • avatar
    yankinwaoz

    Regarding the $1.4b pension liability. Would that not be a liability no matter what happens by 31-Dec? In other words, the liability doesn’t appear on 01-Jan. It is already there. The only question is when it gets paid.

    But I expect, like most other pensions in the US, that the taxpayers are going to end up picking up the pension. Just like United Airlines did.

    So that liability really isn’t one since the PGBC is waiting on the sidelines to catch it, and screw the taxpayers one more time, when it does fail. I doubt the executives at Delphi spend one second worrying about it.

  • avatar
    Matthew Danda

    Who would want to be a manager at Delphi if they didn’t give bonuses?

  • avatar
    ca36gtp

    The easiest way to get rich for life is to make it to the upper echelons of a company and then *screw up*. Just look at Chuck Prince.

  • avatar
    ihatetrees

    These bonuses are insane. From what I understand, Delphi is having trouble keeping mid-level management and engineers.

    But ~500 managers are going to carve up ~$200 mil?!? That’s $400K each!?!

    If I were a Ford or GM manager looking at this, I’d have to think, “We need to git this judge when we file.”

  • avatar

    Nothing is gonna change until CEOs across the board get fined/jailed/publicly humiliated for what they’re doing to our companies.

    And that’s never gonna happen. Maybe TTAC should start an Executive Compensation Watch, just to make the plebeians feel better.

  • avatar
    ca36gtp

    The problem is that CEO bonuses and whatnot are a private sector decision, and while reprehensible in many cases, are not and SHOULD NOT be illegal. There’s a little thing called liberty we claim to defend in the free world.

    Everyone has liberty to be a moron.

  • avatar
    Landcrusher

    I don’t see why the union should be treated any different than the other suppliers. As soon as they start working under a union contract they really work for the union that is now providing labor for the company. I know that’s not how the law sees it, but I see it that way.

    Actual employees should be first to be defended, followed by suppliers. Now the real pickle are the officers of the company. In our present system it seems that the stock holders are not really running the company, and I have to agree that the first ones burned should really be the officers.

    Would someone here please explain how the stockholders suddenly lose their rights to fire all the management? It would seem to me that the stockholders would ALWAYS choose to liquidate the company if there were any chance at all of getting money back for their investment. Even if there was not, it would seem they would somehow set themselves up to get preferential treatment to buy back into the new company.

    I am really at a loss as to how the officers can ignore their fiduciary obligations to everyone other than themselves.

  • avatar
    taxman100

    Corporate America is run for the benefit of executives and Wall Street – any other entities or individuals who derive any positives are completely unintentual.

    The government figured out how to get themselves in the group of executives and investors, but they have guns and are allowed to use them to get their way.

  • avatar
    ihatetrees

    Matthew Danda:
    Who would want to be a manager at Delphi if they didn’t give bonuses?

    There’s a certain logic to that. Especially in a firm that has bribed bought out many union members to retire early.

    But the upper management ranks should be the ones held accountable. IF this money was more widely spread over all managers (some of whom haven’t got raises in a while), there may be justification. But $400K over 500 people seems way too pricey.

    One possible solution to this: Ease corporate takeovers.

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