December 05, 2005

The Impunity of Corporate Thieves

What judge in his right mind, conservative or liberal, would reward corporate executives who have run a company into the ground with something called a Key Employee Compensation Plan that provides for millions of dollars in incentives for them while they work their way through Chapter 11 bankrupcty. It's theft of the worst kind. No accountability or responsibility for their corporate and managerial failures. Just let them keep on stealing the company's money, exploiting the workers, and robbing the stockholders. Read on.....

Delphi attacks workers and spoils execs
CEO Miller should stop the insults, negotiate equitable plan with UAW
by Ron Gettelfinger

Suppose your employer was in serious financial trouble. Would you be willing to make sacrifices to keep the company going? If you were confident the sacrifices would be shared equitably from top to bottom – and that everyone would be rewarded fairly when the company got back on its feet – you probably would.

But what if your company's chief executive wanted to cut your pay and benefits by more than 60 percent, while giving a select group of executives, including many who steered the company into the ditch, bonuses and stock potentially worth more than $500 million? And what if some top executives were in line for bonuses totaling $21.5 million for the first six months the company was in bankruptcy?

And what if your boss, who'd been on the job just five months, spent much of his time jetting around the country doing interviews with Business Week, the New York Times, the Washington Post, the Wall Street Journal and other media in which he declared the company's biggest problem is that workers like you are grossly overpaid while top executives are woefully underpaid?

Chances are you'd be insulted, outraged and flat-out disgusted.

Of course, no chief executive in his right mind would ever really do those things, right? Wrong.

Delphi Chief Executive Robert S. "Steve" Miller is doing all that and more.

In his many media interviews, Miller has told Delphi's hourly workers (and all blue-collar working Americans) that the American Dream is a thing of the past unless you're as smart and powerful as, well, Steve Miller and his army of high-priced bankruptcy lawyers and restructuring consultants.

Miller's first contract proposal to the UAW would have slashed the wages of production workers to $9.50 an hour, which works out to $19,760 a year – barely above the official U.S. poverty level of $19,197 for a family of four. His second proposal was only marginally better: $10.50 an hour, rising to $12.50 over two years. Plenty of people, Miller says, get by on these wages.
Maybe Miller should try it. He's made a lot of noise about taking only $1 a year starting Jan. 1, but my guess is that he'll "get by" on his $3 million signing bonus and $750,000 salary for July-December of this year. By the way, at $10.50 an hour, a Delphi worker would have to work 171 years to match Miller's $3.75 million for six months on the job.

And rest assured, Delphi executives won't have to worry about getting by. The company has filed with the federal bankruptcy court a proposed "Key Employee Compensation Plan" that, among other things, would give an unspecified number of Delphi executives "incentive bonuses" totaling $43 million during the two years Delphi expects to be in Chapter 11 reorganization.

An additional $88 million would go to Delphi's top 500 executives when the company emerges from bankruptcy or its assets are sold off at fire sale prices. In other words, they get the money whether Delphi survives or dies. If it does emerge from bankruptcy, fewer than 600 "key employees" will get 10 percent of the shares in the "new" Delphi.

In other words, while Miller is intent on kicking Delphi's hourly workers out of the middle class, he's just as intent on lavishly rewarding the people at the top for, well, presiding over things like accounting irregularities and Delphi stock plummeting to 33 cents a share.

The UAW and other unions are fighting Delphi's obscene "pay for failure" plan in court. And we're not alone; the Pension Benefit Guaranty Corp., the U.S. bankruptcy trustee, and shareholder and bondholder groups have filed complaints, too.

Delphi's "key employees" aren't the only ones who stand to make millions through the company's bankruptcy. On Wednesday, The Detroit News detailed the flood of money from Delphi to law firms, investment bankers and consultants.

A few highlights: Delphi's lead law firm, Skadden, Arps, Slate, Meagher & Flom, was paid $9.85 million before Delphi filed for bankruptcy on Oct. 8; the firm's lead attorney bills Delphi $835 an hour. The investment banking firm Rothschild & Co. is in line for a $15 million "completion fee" when Delphi completes its reorganization plan.

Miller has called Delphi "a flash point, a test case, for all the economic and social trends that are on a collision course in our country and around the globe." I agree, though for very different reasons.

If Miller's vision of America's future gains wider acceptance by corporate and government leaders, we're all in deep trouble because his vision is an America sharply divided between a super-rich elite and the working poor, with no middle class as we know it today.

Make no mistake: The UAW is willing to work with Delphi to craft a fair and equitable plan to get the company back on track, just as we've worked with Chrysler, Navistar, Ford, General Motors and other companies to solve tough problems.

We've proven we can do it. Now, it's up to Steve Miller to stop his counterproductive attack on workers, their families and our communities and negotiate in good faith.

This article was reprinted from the UAW website and first appeared on Dec. 2, 2005, in the Detroit News’ Labor Voices.

1 comment:

Gouda said...

It's so hard to read the news some days.