Wednesday, September 06, 2006
"A plan to pay millions of dollars to the top officials of the Dana Corporation, the auto parts company [now in bankruptcy], violates the new bankruptcy law and cannot go forward, a judge ruled yesterday...Judge Burton R. Lifland of the Federal Bankruptcy Court in Manhattan said that the proposal was an illegal plan to retain Dana’s chief executive and other top executives."
Now read this comment made by he chairman of Dana’s compensation committee:
“If you can’t pay an individual a fair wage, and they’re in the middle of a Chapter 11 under tremendous pressure, it seems only logical that they would begin looking around…”
He added that Dana's CEO 'had repeatedly expressed fears that some of his top executives would leave if their pay could not be raised to the levels previously expected.'
And that's a bad thing? Why are these executives still there after driving the company into bankruptcy? Why weren't they urged to start "looking around" when their performance was declining? When lower-level employees don't meet their objectives, they're put on development plans and their employment is eventually terminated if they don't start doing their part to do to help the company stay solvent. But executives get away with poor performance? It would make more sense if an executive staff that causes a bankruptcy got ousted.
Reorganizations under Chapter 11 might be handled better by a professor with a team of business graduate students.