UPDATE: Chrysler Won't Award Retention Bonuses Any Longer
19 März 2009 - 7:34PM
Dow Jones News
Chrysler LLC confirmed Thursday that it will no longer pay
retention bonuses as part of the cost-concessions needed to secure
more funding from the U.S. Department of Treasury.
"No new retention payments or any other form of bonus, will be
awarded after Jan. 2, 2009 as a result of the waivers signed by the
company's top 25 executives," Chrysler said in a statement on its
Web site. "We continue to work with the U.S. Treasury on a daily
basis."
Chrysler and General Motors Corp. (GM) are racing to secure new
cost cuts from its executives, suppliers, unions and dealers in
order to receive additional low-interest loans to avoid
bankruptcy.
Details on Chrysler's progress in winning these cost-concessions
must be submitted by March 31. Chrysler is working to obtain
another $5 billion in funding after already $4 billion earlier this
year.
Separately, Chrysler Chief Executive Bob Nardelli once again
stated his case as to why the auto maker could operate as a
stand-alone company or partner with Fiat SpA (FIATY). The Fiat
partnership, however, would "significantly enhance" the auto
maker's long-term viability.
"There are at least four platforms being discussed today [with
Fiat] along with two engines and two transmissions so when you
think what it would cost for us to develop, it is certainly in the
range from $8 billion to $10 billion, Nardelli said in a video
clip. The clip will also be released on YouTube.
The Fiat partnership will allow Chrysler to pay back taxpayers
more quickly since Fiat would assume responsibility for 35% of all
of Chrysler's debt to the U.S. government. Under the proposed
terms, Fiat would take a 35% stake in Chrysler and provide the auto
maker with its own car technologies.
Chrysler's product portfolio would also see an overall 26%
improvement in federal fuel economy standards over 2010 models
based on technology provided by Fiat.
"They have what we don't and they are where we aren't," Nardelli
said. The partnership would also give Chrysler and Fiat a combined
purchasing budget of $80 billion. "It is a perfect fit."
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com