In Re Dana Corp.
Dana Corporation, as the debtor, sought court approval for its Executive Compensation Motion, which included the assumption of employment agreements and the establishment of a long-term incentive plan (LTIP) for its CEO and Senior Executives. This was Dana’s second attempt after an earlier, less incentivizing proposal was denied. The motion faced opposition from the U.S. Trustee, unions, and a non-union retiree committee, who raised concerns under Bankruptcy Code section 503(c) regarding retention and severance payments to insiders. The Court, treating the motion de novo, determined that the revised plan was a legitimate incentive program, not primarily retentive, and generally permissible under the Debtors’ sound business judgment. However, the Court expressed concern over the potential cumulative generosity of both the annual and long-term incentive plans for 2007-2008 without a clear ceiling. Consequently, the Executive Compensation Motion was granted, but conditioned on the submission of an order establishing an appropriate annual compensation cap for the CEO and Senior Executives.