Editors note: An earlier version of this story overstated the number of employees receiving the bonus.
DETROIT -- Visteon Corp., the former Ford auto-parts unit thats battling bankruptcy rumors as losses mount, paid a performance bonus last week to 2,700 salaried workers worldwide.
CEO Donald Stebbins and his senior executive team were eligible for the bonuses, spokesman Jim Fisher said today.
Two sources at Visteon said the bonus averaged about 2 percent of annual salary. The award is for meeting quality targets in 2008, Fisher said.
While announcing a 2008 net loss of $633 million last month, Visteon reported that it had substantially exhausted its U.S. lines of credit and said it could break its loan terms. The stock has been delisted from the New York Stock Exchange and is trading for about 4 cents a share.
The decision to pay the bonus amid rising losses and work force reductions recognizes the importance of quality in winning new business, Fisher said.
He said Visteon customers in 2008 measured a 36 percent improvement in product quality over 2007. Visteon makes auto interiors, climate controls and electronics.
The move comes as Visteon faces a deadline tomorrow for making a $16 million interest payment on bond debt. Financial analysts speculated this month that Visteon may miss the payment.
Fisher declined to discuss the interest payment.
He also declined to confirm the size of the bonus or how much it cost Visteon. He said it was part of an annual incentive program. Visteon was spun off from Ford in 2000.
At the end of 2008, Visteon had $1.18 billion in cash and cash equivalents, and another $68 million in an escrowed restructuring account funded by Ford. That is well above the 10 percent of revenue deemed safe for parts suppliers. Visteon reported revenues of about $9 billion in 2008. Visteon has never recorded an annual profit since its spinoff from Ford.
Industry conditions have worsened significantly in the first quarter. North American vehicle production was down 55 percent through March 7.
Visteon has responded with job cuts, salary reductions and other cost savings. Visteon has cut 625 salaried jobs since October and is eliminating another 375 by the end of March, Fisher said. Visteon has 8,700 salaried workers worldwide.
The 2,100 salaried employees at Visteons suburban Detroit headquarters and a second technical center also took pay cuts in February ranging from 2 percent to 10 percent, he said. Those reductions run through June.
Fisher said Stebbins pay cut was 10 percent.