Under Dana Corp.'s latest attempt to beef up executive compensation during its bankruptcy, Chief Executive Mike Burns could get up to $6.75 million in cash and stock in the newly emerged company if certain financial goals are met in the next two years.
If those goals are not met, however, Mr. Burns would get just his base pay and no bonus through 2008.
And Mr. Burns is assured of only 60 percent of his pension at most, although the Toledo auto supplier's leader can file an unsecured claim for the rest, according to a motion the company filed this week in U.S. Bankruptcy Court in Manhattan.
Dana said it has received support from the creditors committee for its latest incentive plan for Mr. Burns and five other top executives. The five others collectively could receive up to $4.77 million.
It is the third time Dana has re-crafted the plan.
Bankruptcy Judge Burton Lifland denied a Dana request in September to give retention bonuses of at least $4 million to Mr. Burns and more than $4.3 million to the others if the company emerges from bankruptcy or is sold.
The judge said the plan violated the law aimed at preventing executives from taking sizable bonuses while workers suffer cuts in pay or benefits. Dana's first plan, proposed almost four months after the company filed for bankruptcy in March, called for Mr. Burns to get a $6 million bonus if the firm successfully emerged from Chapter 11.
He also would have received annual cash incentive bonuses through 2007 if the company reached certain goals, or $2 million for this year. Bonuses are considered important by board members and industry experts as a way to keep top executives from fleeing bankrupt companies during their reorganizations.
Dana's latest proposal is based solely on performance and carries no guarantees, said spokesman Chuck Hartlage. Mr. Burns received a base salary of $1 million and total compensation of $2.2 million last year, down from $11.7 million in 2004.
"Outside of Mike's base salary, virtually all of his potential compensation is performance-based," Mr. Hartlage said.
A hearing on the latest plan is scheduled for Nov. 21, and objections are due by Tuesday. Dana's past executive-compensation attempts have drawn objections from creditors, shareholders, unions, retirees, and others, especially because Dana is trying to trim health-care benefits for retirees.
An attorney for the equity committee in Dana's bankruptcy case declined to comment yesterday. Attorneys for the creditors and non-union retirees committees could not be reached for comment.
If Dana reaches its performance goals for next year, the new plan would give Mr. Burns up to $4.5 million, the first $3 million in cash and the rest in stock of the reorganized company.
He would get up to $2.25 million in stock of the reorganized company if 2008's goals are met, the court filing said.
As for pension, Mr. Burns is assured 60 percent only if Dana does not terminate any such plans for employees during the reorganization, the filing said.
His employment agreement also will be modified under the plan so that he cannot accept a job from a competitor, disclose confidential information, or try to hire away Dana employees for six months if he is fired or resigns before the company emerges from Chapter 11.
The same will hold true for a year if he is fired or resigns after the reorganization.
If Mr. Burns' employment is terminated, he would have to waive or limit corresponding damage claims against Dana, which otherwise could approach $9 million, the filing said.
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