"I would have a preference for cash." Who doesn't?
When given the choice between accepting millions of dollars in cash or an "equivalent" value of stock in a bankrupt corporation, which would you choose? If you said cash, then you are in agreement with the former CEO and current chairman of Delphi. That corporation's plan of reorganization is being scrutinized by the New York Bankruptcy Court in Manhattan and provides Steve Miller an $8.3 million "emergence" from chapter 11 bonus. In total, the plan provides $87 million in emergence bonuses to executives.
The IUE-CWA union objected to the provision on the grounds that it was too high and as part of a proposed settlement of the objection asked if Miller would accept stock in lieu of cash. In answering Miller stated that "I decided I would accept it as cash. I would have a preference for cash." "So would the creditors," was the union's lawyer's response. More on this story can be found here.
How could Delphi expect that such exorbitant bonuses would not be questioned? Does an executive really deserve a bonus for leading a bankrupt organization out of Chapter 11; especially when he was the one at the helm when it entered bankruptcy? The union obviously doesn't think so, considering that Delphi may have $8.65 billion in financing for operations going forward out of bankruptcy is the $8.3 million to the former CEO of any significant consequence other than emotionally? I would say probably not. Rarely is the compensation for executives subject to review by union or others, however, so the bankruptcy proceeding provides the perfect opportunity for the union and its lawyers to shine a spotlight on executive compensation and question its merit. I can't say that I blame them.
