Opposition growing to Visteon bonuses

In sharp contrast to tradition, where large bonuses routinely have been approved for executives of failed companies even as the firms cut thousands of jobs and ignored promises to retirees, the latest proposal to pay over $30 million to the top 100 executives at bankrupt supplier Visteon is drawing fire from all quarters.

Ford Motor Company, which spun off Visteon in 2000, has been joined by General Motors Company, the United Auto Workers, the committee representing unsecured creditors and the U.S. trustee overseeing the Visteon bankruptcy in objecting to the company’s continuing incentive programs in place prior to the company’s Chapter 11 filing on May 29.

Visteon has never made an annual profit but had proposed paying as much as $80 million in bonuses and incentives, a sum Ford described as “entirely too rich.” GM described the bonuses as out of line in a time when thousands of workers are losing their jobs and those remaining have seen their compensation frozen or cut.

GM also objected to the bonus plan because it is one of the companies on which Visteon is depending for exit financing from bankruptcy. The other companies are Ford, Chrysler Group and Nissan North America. GM noted Visteon’s financing package may be jeopardized because its lenders, who are also its customers, could be turned off if Visteon’s bonus package is approved over the objections being raised.

U.S. Trustee Roberta DeAngelis has objected to the bonus plan because Visteon does not have the cash to fund it and the bonuses are based on goals that are already part of the fiduciary obligations of the company’s executives.