Airline's bosses get big bonuses
The Cincinnati Enquirer
12-8-04
Delta Air Lines has awarded its top six managers a bonus of about 300,000 stock options apiece.
The move came just two weeks after the Atlanta-based carrier and its pilots union signed an agreement cutting pilot compensation by $1 billion annually. Union officials expressed displeasure with the action.
The executive options were awarded Nov. 17, a week after another deal granting stock options to non-union workers was announced. The airline's top six officers will receive about 300,000 options apiece, with the exception of chief executive officer Gerald Grinstein, who has forsworn bonuses and salary for the last third of the year.
The executives can buy the options in installments over the next three years at $7.01 per share, and sell them back at a profit if the shares rise above that price.
Delta stock (NYSE: DAL) closed Tuesday at $7.68, down 13 cents, or about 1.7 percent.
The company operates its second-largest hub at Greater Cincinnati/Northern Kentucky International Airport. More than 800 pilots are based locally.
In return for the contract concessions, the pilots were given the opportunity to buy stock options and eventually could own 15 percent of the company. All non-union workers, who will see their pay cut by 10 percent Jan. 1, are being given similar options, to buy another 15 percent, which could mean that all employees (pilots and others) could own nearly a third of the company. And Delta has given similar options or awarded new shares to creditors to sweeten debt-refinancing deals.
In a filing to the Securities and Exchange Commission, the airline said the bonuses were similar in scale to those given to other workers, and that the exercise price was actually higher for executives.
But in a letter to pilots, union chairman John Malone blasted the deal, saying: "the generals are dining while the troops are toiling." The company plans to cut 6,000 to 7,000 jobs worldwide beginning next month.
"Are we to infer that shared commitment means labor sacrifices so management can be rewarded with richer options packages?" Malone wrote in a letter to the union's nearly 8,000 members. "Even the lowliest private can spot the problem here."
Delta has seen controversy over its executive compensation program before. Previous chairman and CEO Leo Mullin was roundly criticized for taking large cash and stock bonuses even as Delta continued to lose money and he asked for severe pilot cutbacks.
Mullin eventually gave back some of those bonuses and retired at the beginning of this year
The Cincinnati Enquirer
12-8-04
Delta Air Lines has awarded its top six managers a bonus of about 300,000 stock options apiece.
The move came just two weeks after the Atlanta-based carrier and its pilots union signed an agreement cutting pilot compensation by $1 billion annually. Union officials expressed displeasure with the action.
The executive options were awarded Nov. 17, a week after another deal granting stock options to non-union workers was announced. The airline's top six officers will receive about 300,000 options apiece, with the exception of chief executive officer Gerald Grinstein, who has forsworn bonuses and salary for the last third of the year.
The executives can buy the options in installments over the next three years at $7.01 per share, and sell them back at a profit if the shares rise above that price.
Delta stock (NYSE: DAL) closed Tuesday at $7.68, down 13 cents, or about 1.7 percent.
The company operates its second-largest hub at Greater Cincinnati/Northern Kentucky International Airport. More than 800 pilots are based locally.
In return for the contract concessions, the pilots were given the opportunity to buy stock options and eventually could own 15 percent of the company. All non-union workers, who will see their pay cut by 10 percent Jan. 1, are being given similar options, to buy another 15 percent, which could mean that all employees (pilots and others) could own nearly a third of the company. And Delta has given similar options or awarded new shares to creditors to sweeten debt-refinancing deals.
In a filing to the Securities and Exchange Commission, the airline said the bonuses were similar in scale to those given to other workers, and that the exercise price was actually higher for executives.
But in a letter to pilots, union chairman John Malone blasted the deal, saying: "the generals are dining while the troops are toiling." The company plans to cut 6,000 to 7,000 jobs worldwide beginning next month.
"Are we to infer that shared commitment means labor sacrifices so management can be rewarded with richer options packages?" Malone wrote in a letter to the union's nearly 8,000 members. "Even the lowliest private can spot the problem here."
Delta has seen controversy over its executive compensation program before. Previous chairman and CEO Leo Mullin was roundly criticized for taking large cash and stock bonuses even as Delta continued to lose money and he asked for severe pilot cutbacks.
Mullin eventually gave back some of those bonuses and retired at the beginning of this year
