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Execs at Delphi and Visteon score big raises

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EARNINGS, COMPENSATION: Visteon grants raises

Supplier's year-end results improve with help from former owner Ford



February 11, 2006

Executives at Visteon Corp., the nation's second-largest auto-parts supplier, recorded handsome raises even as the company announced year-end losses Friday.

In filings with the Securities and Exchange Commission Friday, Visteon reported fourth quarter and year-end earnings and details about increased compensation for executives.

The pay raises come as the company's numbers improved last year, even though that improvement depended almost solely on relief from former owner Ford Motor Co.

For the three months ending Dec. 31, Visteon reported net income of $1.3 billion, or $10.58 a share, up substantially from a loss of $138 million, or $1.10 per share, during the same period a year earlier.

But Visteon's net income for the fourth quarter included a gain of $1.8 billion related to the transfer of 23 plants to a Ford-controlled holdings group. Visteon's agreement with Ford also allowed the transfer of 1,000 employees to Ford plants in 2005 and 800 in the first six weeks of this year.

For the year, Visteon narrowed its losses to $270 million, or $2.14 a share, compared to a loss of $1.5 billion, or $12.26 a share in 2004. This marks the fifth straight year of Visteon losses.

Directors vote for raises

In the shadow of its earnings performance, Visteon's directors disclosed to the SEC that they approved significant pay raises for executives and themselves.

Visteon's directors agreed to increase bonuses to executives that range between 50% and 130% of their base salary. In addition they approved larger long-term incentive awards that range between 120% to 475% of their base salaries.

Directors gave three top executives raises in base pay:

President and Chief Operating Officer Donald J. Stebbins got a $40,000 raise to $890,000.

Executive Vice President and Chief Financial Officer James F. Palmer received a $40,000 raise to $775,000.

Vice President, Controller and Chief Accounting Officer William G. Quigley III received a $20,000 raise to $370,000.

Visteon's eight directors also approved for themselves a yearly pay of $70,000 and an annual restricted stock award of $70,000. In addition, directors who chair a committee will get an additional $10,000 a year.

Previously those directors received an annual pay of $40,000, plus an additional $10,000 for each committee they served on and another $500 for each committee meeting they attended.

Three Visteon executives last year were listed among the top 50 in the Free Press Executive Compensation Report: Former Chairman Peter J. Pestillo had total compensation of $4.28 million; Chairman and CEO Michael F. Johnston, $4.16 million; and Palmer received $3.44 million.

Wally Greene Jr., a former hourly Visteon worker who now works for Ford in Sandusky, Ohio, called the executive compensation sickening.

"Why don't people in this country wake up and stand up to these greedy" executives "and say enough is enough," Greene said.

UAW spokesman Paul Krell said Thursday after being told in advance about the filing that the union firmly opposes the pay raises.

President Ron Gettelfinger "has been very consistent saying executive compensation across the board has gotten way out of line in comparison to what employees make," Krell said.

The case of Delphi

Visteon's executives and public relations staff can expect a flood of heated phone calls and e-mails if news of the pay increases is interpreted like that of Troy-based auto supplier Delphi Corp.

Delphi, as a case study, is proof that many investors and hourly employees are unforgiving to company executives reporting losses while making higher salaries and bonuses. Less than a week after filing for bankruptcy in October 2005, Delphi, the nation's largest automotive supplier, filed a motion to get extra pay for executives in an attempt to keep them faithful to the company.

"The decision to seek approval of executive bonuses within one week of seeking historic and life-changing sacrifices from rank and file employees is simply not a reasonable or justifiable exercise of business judgment," the committee said in its Feb. 6 filing.

Several Delphi executives stand to make millions if the company's entire compensation program is approved. Delphi President and Chief Operating Officer Rodney O'Neal, 51, with an average annual salary of $1.2 million, could receive more than $20.3 million; vice chairman David B. Wohleen, 54, with an average annual salary of $890,000, could receive more than $16.2 million, and chief financial officer Robert J. Dellinger, 44, with a $750,000 average annual salary, could receive more than $12.5 million.

Delphi's executive pay proposal has been a stumbling block in intense negotiations to reduce an overbearing cost structure with General Motors Corp., its chief customer and former owner, and the UAW, its largest union.

In December, Delphi's directors said they will pay themselves in cash -- $140,000 to $200,000 a year -- since it no longer made sense to continue paying all, or at least half, of their salary in stock.

Shares in the nation's largest maker of auto parts have been essentially worthless since the board took the Troy-based company into bankruptcy Oct. 8.

"The board felt the current plan was no longer appropriate," Delphi spokeswoman Claudia Piccinin said Dec. 9.

Hourly jobs at risk

Visteon executives are getting raises just after an embarrassing earnings restatement last November that led directors to restate results for 2001 through 2004 after two former employees engaged in improper conduct, according to the SEC filing at the time.

The executive raises also come when hourly Visteon jobs are at risk. At an automotive analysts conference in Dearborn last month, Visteon executives summarized the company's strategy and financial outlook, which included a plan that will cost about $800 million in severance and benefits costs, contract termination, production transfer and other costs.

Visteon beat analysts' estimates polled by Thomson Financial, which expected Visteon to report a loss of 69 cents per share.

Visteon is raising its estimate for 2006 full-year earnings to a range of $45 million to $75 million. Additionally, Visteon expects to generate about $50 million of free cash flow and expects 2006 full-year product sales of approximately $11.2 billion, with 58% coming from non-Ford sales.

"With the Ford transaction completed, we are now focused on implementing our multiyear plan to restructure Visteon and improve our earnings and free cash flow," Johnston said Friday.

Visteon has more than 170 facilities in 24 countries and employs about 50,000 people. It has corporate offices in Van Buren Township; Shanghai, China; and Kerpen, Germany.

Link: http://www.freep.com/apps/pbcs.dll/article.../602110363/1014

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NOTICE : the lack of chimeing in on this topic

its amazing whats legal and whats illegal in this country, typically I would think that could be classified as grand larceny........multiple counts

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It's a public company...they can give their execs whatever bonuses they want. Not that I agree with it when they are laying off people but theres nothing illegal about it.

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