CHICAGO -- Delphi Corp.'s top executives -- whom hourly workers had criticized for taking sweetened bonus packages while workers face drastic cuts -- will reduce their annual pay until the auto parts maker emerges from bankruptcy, the company said on Monday.
CEO Steve Miller slashed his annual salary to $1 a year until the Troy, Michigan, auto parts supplier leaves bankruptcy protection.
In addition, executives who were at the company when Miller joined have waived 10 percent of their annual base pay, or 20 percent in the case of President Rodney O'Neal, the company said. The changes are effective Jan. 1, 2006.
Delphi filed for the largest bankruptcy protection case in U.S. automotive history earlier this month. Delphi's bankruptcy filing brought into clear focus long-standing fears that the U.S. auto industry was doomed to follow airlines and steel mills by slashing formerly robust wages and retirement plans.
As part of its restructuring, Delphi has said it will need to drastically reduce the pay and benefits of hourly workers as well as cut the number of salaried workers and close or sell a substantial part of its North American operations to allow it to regain profitability.
Delphi has about 50,600 U.S. employees, including 34,750 hourly workers who are almost all represented by unions. The United Auto Workers represent about 25,000 Delphi workers.
Miller had previously said company executives were underpaid compared with rivals. A company attorney also had defended the bonus plans, saying some senior executives would be, in effect, writing business plans or performing tasks that would put them out of jobs and Delphi wanted them to have incentive to complete the work.
"I have given the subject of executive compensation a great deal of thought and planned to announce a reduction in my own compensation, as I had previously suggested," Miller said in a statement on Monday. "In addition to my annual salary of $1, I will continue to receive zero bonus, zero severance, zero pension plan and will have no other similar entitlements whatsoever.
"While I remain concerned about the below-market compensation paid to many of our key executives, Delphi's transformation message must be unambiguous and marked indelibly by the commitment of Delphi's leadership," he added.
Delphi said that the balance of compensation arrangements for its executives would be decided by the bankruptcy court at a Nov. 29 hearing.