Court OKs bonus plan for Delphi executives

The amount of bonuses will depend on Delphi earnings.

NEW YORK (AP) — Delphi Corp. won court approval Wednesday to extend an executive bonus program that could pay as much as $39.1 million in all to hundreds of executives in the U.S.

The bonuses under the annual incentive plan for the first six months of 2008 are to be paid to 442 executives of GM’s biggest auto parts supplier, including 21 members of Delphi’s top-level strategy board. The performance-based bonuses, which could range from $21.2 million to $39.1 million, have a company earnings target of $871.1 million before interest, taxes, depreciation, amortization and restructuring costs. To get $39.1 million, profits would have to reach $1.3 billion.

If the company stays in Chapter 11 beyond Aug. 15 and it fails to meet its earnings target, the maximum payout for bonuses could be roughly $25.5 million.

The company’s restructuring plan was created assuming a market value for Delphi of $12.8 billion, or $59.61 a share. The court approved the plan in January.

U.S. Bankruptcy Judge Robert Drain also gave the auto parts supplier a two-month extension on its exclusive control of its case, as it seeks $6.1 billion in exit financing that has so far been elusive in a tight credit market. It was the company’s sixth such extension.

Delphi lawyer Jack Butler said the company had made “substantial progress” on the syndication of loans.

On March 10, Delphi relaunched an effort to secure the loans, with help from its former parent, General Motors Corp. Delphi can take three loans worth as much $3.58 billion from GM and its affiliates. GM’s increased participation was opposed by five of six major investors who plan to invest as much as $2.55 billion in exchange for equity in the reorganized company.

Troy, Mich.-based Delphi has been in bankruptcy since October 2005 and is under pressure to raise its exit loans, a condition of the $2.55 billion equity investment plan.

The Appaloosa Management LP hedge fund leads a group of equity investors that includes Harbinger Capital Partners Master Fund I Ltd.; Merrill Lynch, Pierce, Fenner Smith Inc.; UBS Securities LLC; Pardus Capital Management LP, and Goldman Sachs Group Inc.

Drain, the judge, also approved the sale procedure for a $18.8 million asset sale from Delphi’s damper business to Tenneco Inc. If the company does not emerge from court protection by the end of April, the court will consider the sale at an April 30 hearing.

The damper business in Kettering, Ohio, generates $100 million in revenue a year and employs 420 union workers represented by the International Union of Electrical Workers.