Delphi CEO: Pay me $1

Delphi Corp. chairman and CEO Robert Miller will reduce his $1.5 million base salary to $1 per year, effective Jan. 1, through the end of the reorganization process.

"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," said Miller in a statement. "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."

Officers who were at Delphi when Miller joined the company in July have volunteered to waive 10 percent of their base pay. President Rodney O'Neal will give up 20 percent, also effective in January.

Steven Szakaly, an economist with the Center for Automotive Research in Ann Arbor, Mich., said Monday's announcement is "a little late."

"I think that they've learned that they have to work with the union," he said. "Part of working with the union is sharing the sacrifice."

Szakaly said Miller has likely been talking with Delphi plant managers, and "I'm sure the [executive] compensation package did not go over well with the rank and file."

Business case?

An employee compensation program overview, prepared by global consulting firm Watson Wyatt, has been circulating through Delphi.

The 36-page document, obtained by the Tribune from an e-mail distributed among local Delphi employees, details Delphi's business case for retaining top executives, whom Miller has said are apt to leave for other companies if they continue to be undercompensated.

Part of the company's plan to retain its executives is an emergence bonus plan that would pay about 486 white-collar employees lump-sum payments totaling $87.9 million, according to the document. In addition, the executives would receive about 10 percent of the restructured company's stock.

"Despite the adverse [effect] on the overall employment proposition, Delphi must strive to retain its executives ... who possess unique or critical knowledge of Delphi's businesses," the document reads. "Such institutional knowledge, which could not be readily replaced on the open market, is necessary not only to maintain Delphi's ongoing operations, but also to assure successful completion of the restructuring."

The document argues it is more costly and time-consuming to find replacements for departed executives than provide incentives for existing executives.

"In the case of executives more so than other employees, their actual pay for 2005 will be substantially less than market," the document says. "Actual pay for 2004 was also substantially less than market."

Executive turnover within Delphi has increased nearly 75 percent in the last 12 months and that turnover has more than doubled in the critical finance function, the Wyatt document says. In addition, 60 percent of the departed executives had been identified as being future high-potential individuals or successors to the positions held by their immediate supervisors, the document says.

Delphi spokeswoman Claudia Baucus said it is difficult to quantify the importance of retaining knowledgeable key executives, adding a bankruptcy court judge will rule on the fairness of the compensation plan.

The balance of compensation arrangements for Delphi executives will be decided by the bankruptcy court at the company's Nov. 29 omnibus hearing when the company's key-executive compensation program motion will be heard by the court.

The key-employee compensation programs have been the subject of controversy since Oct. 7, the day before Delphi filed for Chapter 11 bankruptcy protection.

That was when Delphi sweetened the severance packages for 21 top executives, a move UAW leaders termed "a disgusting spectacle of the people at the top taking care of themselves."

On Saturday, the UAW issued a statement that it will object to the executive severance and bonus programs.

In a media conference call, Miller said his decision to reduce his salary to $1 was "strictly personal." He said in the coming months he will be asking thousands of Delphi employees to take cuts in pay and benefits, but decided he would not be able to look them in the eye in doing so while making over $1 million himself.

The Associated Press contributed to this report.