Bankrupt Delphi's Sweet Deal for Executive Failures
Steve Clemons brings us economist Pete Morici's note on the money Delphi execs hope to give themselves at the expense of bondholders. Excerpt:
Delphi CEO Robert S. Miller is proposing a sweetheart severance packages for 21 top executives and improved compensation for 600 executives in the form of stock options. This is a raid on bondholders and should be disallowed by the bankruptcy court.
These top managers bear considerable responsibility for Delphi's sad situation. As experience in the airline industry demonstrates extra pay for failed managers will do little to improve their performance. There is no reason to believe, as Miller claims, these executives are being paid less than they are worth right now. In fact, they are likely not worth what they are currently being paid.
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Ultimately, the extra pay for executives will come out of what goes to bond holders. That's legalized pilfering.