Lear gets court OK on bonuses

DETROIT (Aug. 26, 3:20 p.m. ET) -- Lear Corp. won bankruptcy court approval Tuesday to pay 29 executives and managers $20.6 million in bonus payments if the company successfully emerges from bankruptcy.

The plan, originally filed July 16, authorizes bonuses if Lear has its Chapter 11 plan approved by April 3, 2010 and the company emerges by May 3, 2010, as well as other financial milestones.

CEO Bob Rossiter is slated to receive a $5.7 million pay-out. Rossiter was paid about $5.4 million in total compensation in 2008, according to company SEC filings. He received no bonus in 2008 or 2007.

In making the case for bonuses, Lear argued that the bonuses were needed to incentivize key employees to make operational improvements and exit bankruptcy as quickly as possible.

The U.S. Trustee overseeing the case has objected to the bonus plans, saying the bonus payments would be made for meeting milestones the company is already required to hit under the terms agreed-upon by the company's lenders and bondholders.

Lear says the plan has the support of its stakeholders, including the bondholders and secured lenders that will eventually own the company post-bankruptcy.

"These business parties acknowledge what the U.S. Trustee chooses to ignore -- that prolonged Chapter 11 cases are not kind to automotive suppliers or recoveries for their creditors," Lear said in a response to the trustee's objection.

"Indeed, automotive suppliers in Chapter 11 face new business holds and potential poaching of existing business, each of which degrades estate value."

Lear, based in suburban Detroit, filed for Chapter 11 bankruptcy July 7 to restructure some $4.3 billion in debt.

The company ranks No. 11 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $13.6 billion in 2008.

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