Visteon asks to pay millions in executive bonuses

Visteon workers fight redundancy earlier this year
Visteon workers fight redundancy earlier this year

Visteon Corp., which moved last week to cut off retiree health-care benefits, has asked a bankruptcy judge to authorize up to $80 million in management and insider bonuses.

Submitted by Steven. on July 12, 2009

Visteon hit the headlines earlier this year when their 600 UK workers responded to being sacked by occupying their workplaces and winning their redundancy pay which they had been denied. Full coverage on libcom was provided here:

Bankruptcy Review reported that $20 million of the bonuses the distressed parts maker wants to hand out is marked for the pay packets of 12 top-ranking corporate executives, according to documents filed Monday in the U.S. Bankruptcy Court in Wilmington, Del.

In the first of three bonus programs, Visteon is asking authorization to spread up to $30 million around to 100 senior managers.

That's slightly less than what it would cost Visteon to continue retiree medical benefits this year for 6,650 former workers, according to documents in which Visteon asked to cancel its "crippling" retiree health-care and life insurance obligations.

Insiders - executives with a high corporate rank - stand to collect nearly $12 million of the $30 million in the first bonus program, the court documents say. Twelve insiders are included in the bonus programs.

The second bonus program covers more than 2,000 salaried employees, and could pay off as much as $38 million, according to Visteon. About $4 million of the second bonus program is cash earmarked for company insiders.

The third bonus program means an additional $12 million for an unspecified number of executives, including nearly $5 million for insiders.

Visteon named no names in documents outlining its bonus program and didn't say whether there were executives who stand to collect under all the programs.

The auto-parts maker has cut its workforce by more than 20% since January. Its May 28 decision to seek bankruptcy protection "has raised substantial, real concerns for...employees," Visteon said.

"The demands placed upon...senior management leading up to and during these Chapter 11 cases have never been greater," according to the company.

The bonus programs are designed to get "a great deal of work" out of the recipients, "resulting in both strengthened business performance and significant cost savings," Visteon said in court documents.

The company has asked the bankruptcy court to consider the bonus programs at a July 16 hearing.