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October 09, 2005

Delphi: Executives Bankrupt a Company, Get a Pay Increase

A lot of commentators want to spin the economic problems in the auto industry as the fault of the union pay and health care contracts.

But nothing shows that the blame belongs with the executives than the announcement that the giant Delphi auto supply company (formerly part of GM) is declaring bankruptcy, yet the executives just had their golden parachutes increased:

[I]n a report to the federal agency that supervises publicly traded companies, Delphi said the top executives are now eligible for up to 18 months of pay and some of their regular bonus.

The old separation policy "wasn't competitive" for the top executives, said company spokesperson Claudia Baucus. Delphi's top five executives, not including Miller, were paid between $800,000 and $1 million last year, she said.

It boggles the mind that anyone can blame workers for trying to make a decent, not a lavish, but a decent living for their families, when top executives piss away millions to pad their own pockets on a scale that most people only dream about.

The likely upshot of the Delphi bankruptcy is to keep those executive salaries flying high, while workers will see their pay, pensions and health benefits slashed.:

The company wants to cut wages to less than half of current levels and eliminate a "jobs bank" that gives full pay to 4,000 laid-off workers...Delphi's retirees face similar cuts if the company follows the lead of steel companies and airlines that have successfully used the bankruptcy courts to offload their pension obligations to the federal Pension Benefit Guaranty Corporation, an agency set up in 1974 that is funded by contributions from premiums paid by companies. Once the agency takes over a pension plan, workers receive only part of their benefits.
It's not that those executive salares directly threw the company into bankruptcy, but they reflect a general mismanagement that has been chronic in the industry for decades. They missed fuel efficient cars and ceded the market to Japan. Having locked themselves into gas guzzlers, they're suddenly caught flat-footed as gas prices soar. They're paying off executives to the tune of millions a year each for dumb, dumb decisions.

Oh yeah, and if they would support single-payer government insurance, their legacy costs for health care would disappear. But again, ideological decisions in the boardroom make them prefer to head towards bankruptcy than support a policy that would help them and help all American workers.

Posted by Nathan at October 9, 2005 09:07 PM