Lear asks for executive bonuses on beating bankruptcy
Sun Herald
Sunday July 19, 2009
LEAR CORP, the world's second-largest maker of car seats, has asked the US Bankruptcy Court for permission to pay up to $US20.6 million ($25.6 million) in bonuses to 29 executives if it meets restructuring targets.Half the payout is tied to Lear emerging from bankruptcy within the next 10 months.This month, the company filed for Chapter 11 bankruptcy, in which a debtor proposes a restructure to maintain the business and repay creditors over a fixed period.Its chief executive, Bob Rossiter, could earn $US5.6 million if the targets are met.The incentive plan was developed by consultants at Towers Perrin who took into account pay for executives at 40 companies, including other vehicle suppliers, some of which also filed for court protection..Lear paid senior executives "materially below the automotive supply industry average", a court filing quoted Towers Perrin as saying in a March report.Lear filed for bankruptcy due to declining demand from customers, including General Motors, as well as volatile energy and material prices.The company listed debts of $US4.5 billion and assets of $US1.3 billion in its petition filed with the court. Lear, with 2008 net sales of $US13.6 billion, makes parts for the daily assembly of about 12,000 vehicles in the US and about 30,000 elsewhere. It reported a net loss of $US689.9 million last year.The company said it agreed on a reorganisation plan with holders of 66 per cent of its secured bank debt and 50 per cent of the $US1.29 billion in unsecured notes.The lenders would receive a portion of $US600 million of new loans, $US500 million of preferred stock convertible into 26 per cent of the company's new shares and another 26 per cent of the common stock of reorganised Lear.Lear expects to pay its suppliers' unsecured claims in full in cash. Existing shareholders won't receive any recovery, the company said.
© 2009 Sun Herald
