From Detroit Free Press

TROY, MI -- Delphi Corp. asked a bankruptcy judge on Friday for permission to continue its executive bonus plan for the second half of the year. If approved, the company would be allowed to set aside $20.2 million if it hits certain financial targets and as much as $37.6 million if it exceeds those targets.

A hearing on the bonuses is slated for Sept. 27 in U.S. Bankruptcy Court in New York. This is the fourth set of short-term bonuses the company has sought permission to pay to its executives. U.S. Bankruptcy Judge Robert Drain approved the other requests despite objections from Delphi's unions. It was unclear Monday whether the unions would object to this round of bonuses.

Executive bonuses are commonly used in Chapter 11 bankruptcy cases as a way to keep compensation competitive and give top management incentives to reach restructuring goals. But they have been controversial, especially as restructuring companies demand wage and job cuts to emerge from bankruptcy.

In Delphi's case, 442 executives are eligible for bonuses -- averaging $45,000 -- if they meet the company's targets for the second half of this year. Those goals include earning $443.1 million before counting costs such as interest, tax, depreciation and restructuring expenses, and a variety of financial targets set for Delphi's business segments.

"It helps to bring incentive compensation opportunities to competitive levels," said Delphi spokeswoman Claudia Piccinin.

Bonuses are paid only for the goals that are reached, she said. Piccinin declined to say how much Delphi has paid out in executive bonuses since it filed for Chapter 11 nearly two years ago. Drain has approved requests to pay about $111 million in bonuses since January 2006.

Delphi Executive Chairman Steve Miller opted out of the incentive program. Instead, the compensation committee of Delphi's board is expected to determine his bonus upon his departure from the company.

Separately, Delphi sought approval Friday of a warranty settlement with its former owner, General Motors Corp. Delphi would pay GM about $200 million in a combination of cash and replacement parts to settle warranty claims from the automaker through Aug. 10 of this year.

A hearing on that matter is slated for Sept. 27.