Dana: Unions urge rejection of pay proposal

12/15/2006

Unions at Dana Corp. urged a bankruptcy judge yesterday to reject a company request to pay its chief executive officer up to $7.5 million a year during the firm's Chapter 11 case.

The cap, which represents the maximum amount the company would be able to pay CEO Mike Burns, does "not relate in any manner to the sacrifices other employee groups are being asked to bear in this case," lawyer Babette Ceccotti wrote on behalf of the United Auto Workers and the United Steelworkers.

Judge Burton Lifland, who is hearing the Toledo auto parts producer's Chapter 11 case in U.S. Bankruptcy Court in New York, has been asked to approve salary caps totaling $16.5 million for Mr. Burns and five other top officials.

Chuck Hartlage, a Dana spokesman, couldn't be reached for comment.

But company officials previously said that the caps, requested by Judge Lifland, have the support of major creditor groups.

Company officials argue that the pay - much of it contingent on improved company sales and performance - is significantly less than Mr. Burns and other officials would have received under a prior proposal.

The proposed payments include each executive's base salary, regular bonus, and a special bonus that replaced the firm's now discarded stock option plan.

The unions state that the judge requested the salary caps so that executives would "share the pain" of the firm's financial reorganization with other employees.

Instead, union lawyers argue, the company has proposed maximum payment to top officials that are "outside the realm of reasonableness, disproportionate, and overly generous."

The increases also are opposed by retirees, who are facing the loss of company-funded health insurance.

Judge Lifland earlier rejected a Dana plan to pay retention bonuses to discourage top executives from leaving before the firm exits Chapter 11.

A Dana spokesman in New York said yesterday that Judge Lifland would likely rule on the proposed salary caps without an additional hearing, but the spokesman was unsure when that would occur.