Fair Game
Royal Pay at Delphi, Reined in by a Judge
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By GRETCHEN MORGENSON
Published: January 27, 2008
MORE than two years ago, the Delphi Corporation, an automotive parts giant, filed for bankruptcy protection. 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.
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Columnist Page: Gretchen Morgenson
Last week, Robert D. Drain, a federal bankruptcy judge in the Southern District of New York overseeing the Delphi bankruptcy, held a hearing to approve the company’s reorganization plan. Delphi hopes to exit bankruptcy this spring.
During the hearing, Judge Drain, who spent roughly an hour on the terms of the payouts and the compensation consultant who devised them, said he would approve Delphi’s bankruptcy exit plan only if the $87 million in incentive pay slated for management was reduced sharply, to $16.5 million. Delphi agreed to the cuts.
Judge Drain’s ruling is a service to every shareholder who feels ripped off by executives and the compensation consultants who serve them. His discussion of the packages brings a pragmatism to the topic of executive pay that is sorely lacking in corporate boardrooms. Let’s hope it is also noted by the compensation committees of public companies’ boards.
Royal Pay at Delphi, Reined in by a Judge
Sign In to E-Mail or Save This Print Reprints Share
Del.icio.usDiggFacebookNewsvinePermalink
By GRETCHEN MORGENSON
Published: January 27, 2008
MORE than two years ago, the Delphi Corporation, an automotive parts giant, filed for bankruptcy protection. 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.
Skip to next paragraph
Related
Columnist Page: Gretchen Morgenson
Last week, Robert D. Drain, a federal bankruptcy judge in the Southern District of New York overseeing the Delphi bankruptcy, held a hearing to approve the company’s reorganization plan. Delphi hopes to exit bankruptcy this spring.
During the hearing, Judge Drain, who spent roughly an hour on the terms of the payouts and the compensation consultant who devised them, said he would approve Delphi’s bankruptcy exit plan only if the $87 million in incentive pay slated for management was reduced sharply, to $16.5 million. Delphi agreed to the cuts.
Judge Drain’s ruling is a service to every shareholder who feels ripped off by executives and the compensation consultants who serve them. His discussion of the packages brings a pragmatism to the topic of executive pay that is sorely lacking in corporate boardrooms. Let’s hope it is also noted by the compensation committees of public companies’ boards.
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