Tuesday, August 12, 2003

What's the buzz?


Delta addresses executive pay

By James Pilcher
The Cincinnati Enquirer

Delta Air Lines executives will continue to take a pay cut while the airline is eliminating its executive pension program and doing away with any executive bonuses this year, company chairman and chief executive officer Leo Mullin told employees in an internal memo Monday.

"The intention has been clear: make further tangible sacrifices in executive compensation; eliminate, as much as possible, any sense of 'we versus they' on compensation philosophy, such that everyone appreciates we are all in this together," Mullin wrote in his memo.

Atlanta-based Delta operates its second-largest hub locally, where it employs about 4,000 workers. The memo said that the lower rates of pay that had been previously announced for all vice presidents as well as Mullin and president and chief operating officer Fred Reid would stay in place. Mullin and Reid took 25 percent and 10 percent cuts, respectively, effective March 1.

The airline also will not make a third planned payment to its executive pension fund, which had become a point of contention with many workers, especially the pilot union.

Delta is seeking a 22 percent pay cut from those pilots, while the company's overall pension fund is underfunded by at least $4.9 billion, and that plan was not necessarily protected in the case of bankruptcy. Meanwhile, the company was staying current on the executive plan, which was to be paid out even if the company went bankrupt.

In addition, Delta said it would not list anyone else in the executive pension plan, and said that all senior officers would not accept any bonuses, even if they were earned, for 2003. Mullin earned a bonus package worth more than $11 million, including $1.4 million in cash, for last year. He returned about 40 percent of that in April.

The bonuses were announced at the same time when the company said it would approach the pilots about a pay cut. In addition, Mullin was seeking government reimbursement for the entire industry when his bonuses became public, and Congress wrote into its aid bill a provision capping the pay for the top two executives with an airline taking federal aid to 2002 levels.




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