Delphi Corp on Friday said it sweetened severance policies for about 21 top officers in a move that may keep executives loyal as the automotive parts maker fights off bankruptcy.
The announcement comes one day after United Auto Workers local units said Delphi is seeking massive wage and benefit cuts. Delphi is seeking financial help from former parent General Motors Corp and concessions from labor unions to restructure its money-losing US operations.
Delphi said its severance plans for top officers, excluding Chairman and Chief Executive Steve Miller, were found to be uncompetitive and that new agreements took effect September 8.
The company's stock, which has fallen steadily from above $6 in August and traded above $9 in the last 12 months, tumbled 25 percent to $1.65 on the New York Stock Exchange, just above an all-time low.
Miller, a turnaround specialist who took control of the largest US auto parts supplier in July, said in September he would prefer an out-of-court restructuring, but is ready to proceed if he does not get at least the framework of a deal in place before US bankruptcy laws change on October 17.
The executive agreements provide for base pay and target bonuses for 18 months if an executive is terminated without cause or chooses to leave for "good reason," Delphi said in a filing with the US Securities and Exchange Commission.
Previously, severance was capped at 12 months. In return, executives must sign confidentiality, noncompete and nonsolicitation agreements, Troy, Michigan-based Delphi said.
Executives terminated because of restructuring, divestitures or outsourcing of their business unit are included unless they are offered comparable employment in connection with those transactions, Delphi said.
A report on Friday in the Detroit News, citing a confidential "update" to UAW members from the union's International Bargaining Team on Thursday, said Delphi could file for Chapter 11 bankruptcy as soon as Friday.
UAW Chief Ron Gettelfinger told a Detroit radio station in an interview on Friday that he is still hopeful an agreement can be reached that would help Delphi avoid bankruptcy.
"We have made every effort to keep this company out of bankruptcy," Gettelfinger said in the interview. "It is our hope that we will be able to work out an agreement that does just that."
On Thursday, UAW local units said Delphi was seeking production wage cuts by more than half to $10 to $12 per hour, cuts in health care benefits, elimination of a jobs bank that includes 4,000 idle UAW workers and the right to close or sell plants.
The cuts would be severe enough that UAW workers would not be able to afford to buy the vehicle they were helping to assemble, but still likely would look better than cuts worked out in court, a Kokomo, Indiana-unit told members in a letter.
Standard & Poor's on Thursday cut its rating on Delphi deeper into junk status, citing increased concerns it may file for bankruptcy in the next few days if it is unable to negotiate a bailout from GM and the UAW.
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