7-Figure Salaries At Bankrupt Auto Giant

Dana Corp., which has argued that it needs to reduce employee and benefit costs to emerge from bankruptcy, says in its annual report that its chief executive recieved total compensation of $2.29 million last year while its chief financial officer earned about $125,000 a month, plus out-of-pocket expenses.

The company, one of the largest auto parts makers in the world, is seeking bankruptcy court approval to reject some labor contracts and retirement benefits. It has said in court papers that its U.S. operations lost $2 billion over the past five years, and executives have made it a priority to move manufacturing operations overseas in an effort to cut costs.

Dana Corp. lawyers are scheduled to return to court Monday to continue seeking permission to abandon labor contracts with its two largest unions. It had planned more negotiations this week to try to reach a deal out of court.

Lawyers for the unions - the United Auto Workers and United Steelworkers - have argued in court that the company is unfairly extracting concessions from retired workers who need the benefits, especially health care, as they age.

Dana Corp.'s annual report, filed Tuesday with the Securities and Exchange Commission, shows that last year its chief executive officer, Michael Burns, had a salary of $1.03 million, plus non-equity incentive compensation of $1.03 million and other compensation of $221,778.

His other compensation included $88,726 for tax reimbursements, $83,480 for supplemental life insurance and undisclosed amounts for such expenses as personal financial planning, use of a company car for part of the year, an allowance for a car, use of company airplanes, costs for home security, Internet access at home, contributions to his 401(k) account and life insurance costs.

The company also says in its report that in addition to his salary – which amounts to about $1.5 million a year - chief financial officer Kenneth Hiltz is being provided with housing in company facilities while he works at the company's offices in Toledo, Ohio.

In September, U.S. Bankruptcy Judge Burton Lifland rejected a compensation plan for six top executives, the first test of a 2005 bankruptcy reform law designed to prevent companies from paying bonuses to senior managers while lower-paid workers see their benefits or jobs cut.

Lifland had said the plan violated the law that was designed to prevent such retention bonuses. Under the rejected plan, Burns would have received between $4 million and $6.2 million to stay until the company exited bankruptcy. Four other executives would have received a minimum of $800,000 and a fifth could have received as much as $1.125 million. The bonuses would have been in addition to salary and incentive bonuses tied to company performance.

In bankruptcy papers, the company said it seeks $405 million to $540 million in annual cost savings, of which $100 million to $150 million is paid to retiree benefits and another $60 million to $90 million from labor costs.

It has reached settlements with 6,300 nonunion retired workers and received a judge's approval to terminate the retiree benefits of active nonunion employees.

Dana filed for bankruptcy protection on March 3, 2006, amid declining demand for sport utility vehicles and light pickup trucks. At the time, it had 44,000 employees. CFO Hiltz was hired March 7, 2006.

The company makes brakes, axles and other parts for carmakers such as Ford Motor Co. and General Motors Corp., which together accounted for 36 percent of Dana's 2004 sales.