The Pension Benefit Guaranty Corp. said Friday that Delphi is now at least $1.25 billion behind in its required pension funding payments, and that its pension account is underfunded by as much as $10.6 billion, according to the Detroit News.
Since the embattled auto parts maker filed for bankruptcy protection in October 2005, it has made $234 million in pension plan payments, according to the paper. However, it should have made nearly $1.5 billion during this period, noted the report, citing Jeffrey Spiker, a PBGC spokesman. Meanwhile, the company is seeking approval to award a $388 million retention program for key executives.
A U.S. Bankruptcy Judge will decide on the matter at a hearing scheduled for January 11. Creditors, unions, and shareholders oppose the company’s “key employee compensation program (KECP),” which would cover 466 U.S. executives. The Detroit News also reported that Delphi wants to award annual incentive bonuses if the company meets financial targets in the second half of 2006 in nine business areas.
The company was already permitted to award about $20 million in short-term bonuses to executives through June 30, according to the paper. Reportedly, under the KECP, 466 executives would share $88 million in cash, plus $300 million in stock in a recapitalized Delphi once it emerges from bankruptcy, which it hopes to do sometime in 2007. CEO Robert S. “Steve” Miller would be compensated separately, said the paper.
Delphi has defended the KECP, asserting that such programs are common at bankrupt companies that want to retain and recruit critical executives. “We’re trying to find a competitive wage rate for all employees,” Shea told the paper. Meanwhile, Delphi’s lawyers said in a November 30, court filing that the company plans to freeze its pension plan in the first half of 2007 for hourly and salaried employees, added the News.