Troubled Visteon Gives Bonus to Salaried Workers
Visteon Corp., the former Ford auto parts unit that’s battling bankruptcy rumors as losses mount, paid a performance bonus last week to 2,700 salaried workers worldwide.
All of the company’s white-collar workers were eligible for the annual bonus, including CEO Donald Stebbins and his senior executive team, spokesman Jim Fisher said Monday, March 9.
Two sources at Visteon said the bonus averaged about 2 percent of annual salary. The award is for meeting quality targets in 2008, Fisher said.
While announcing a 2008 net loss of $633 million last month, Visteon reported that it had substantially exhausted its U.S. lines of credit and said it could break its loan terms. The stock has been delisted from the New York Stock Exchange and is trading for about 4 cents a share.
The decision to pay the bonus amid rising losses and workforce reductions recognizes the importance of quality in “winning new business,” Fisher said.
He said Visteon customers in 2008 measured a 36 percent improvement in product quality over 2007. Visteon makes auto interiors, climate controls and electronics.
The move comes as Visteon faces a deadline Tuesday, March 10, for making a $16 million interest payment on bond debt. Financial analysts speculated this month that Visteon might miss the payment.
Fisher declined to discuss the interest payment.
He also declined to confirm the size of the bonus or how much it cost Visteon. He said it was part of a program given every year since Visteon was spun off from Ford in 2000.
At the end of 2008, Visteon had $1.18 billion in cash and cash equivalents, and an additional $68 million in an escrowed restructuring account funded by Ford. That is well above the 10 percent of revenue deemed safe for parts suppliers. Visteon reported revenue of about $9 billion in 2008. Visteon has never recorded an annual profit since its spinoff from Ford.
Industry conditions have worsened significantly in the first quarter. North American vehicle production was down 55 percent through March 7.
Visteon has responded with job cuts, salary reductions and other cost savings. Visteon has cut 625 jobs since October and is eliminating an additional 375 by the end of March, Fisher said. The 2,100 salaried employees at Visteon’s suburban Detroit headquarters and a second technical center also took pay cuts in February ranging from 2 to 10 percent, he said. Those reductions run through June.
Fisher said Stebbins’ pay cut was 10 percent.