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Mesaba pilots blast $1.1 million for CEO
The union decried executive bonuses at MAIR Holdings while Mesaba employees took pay cuts.
By Liz Fedor, Star Tribune
Mesaba Airlines used bankruptcy laws to extract pay cuts from its employees, but Paul Foley, CEO of Mesaba's former parent company, was given a $550,000 bonus for his performance during the Chapter 11 case.
In a regulatory filing Thursday, MAIR Holdings Inc. reported that it paid Foley nearly $1.1 million in compensation for the 2007 fiscal year that ended March 31. Mesaba was in bankruptcy during that entire period and ultimately was sold to Northwest Airlines in April.
"Paul Foley is the poster child for obscene executive compensation," Tom Wychor, chairman of the Mesaba pilots union, said in a Thursday interview.
"MAIR is a leech living off the pilfered earnings from Mesaba Airlines," Wychor said.
Mesaba filed for bankruptcy in October 2005, but its parent, Minneapolis-based MAIR, remained outside of the bankruptcy process.
While Mesaba was asking employees to accept 19.4 percent in labor cost cuts, Mesaba's unions noted that Mesaba paid MAIR $111 million in dividends between 2002 and 2004. When Mesaba filed for bankruptcy, MAIR had $120 million in cash and equivalents. That money remained off limits to Mesaba.
MAIR's compensation committee changed its criteria for executive compensation following the bankruptcy filing. So Foley and MAIR's other top executives were judged, in part, on retaining the company's capital, maximizing the return from the company's equity ownership of Mesaba and "obtaining a positive resolution to Mesaba's bankruptcy," according to a filing with the Securities and Exchange Commission.
For fiscal 2007, MAIR's board paid Foley a salary of $363,462 and a regular bonus of $350,000.
Foley was given a supplemental bonus of $200,000.
He received $156,779 in other compensation, including a $100,000 retention bonus that was specified in an employment contract he signed in 2004. Foley's total compensation for fiscal 2007 was $1,070,241, up from $720,087 in fiscal 2006.
"We were asked to give up compensation, whereas the company's leadership was given an opportunity to make more money. It is an unfair double standard," said Kris Pierson, secretary-treasurer of the Mesaba pilots union.
Last November, Mesaba's three large unions -- representing pilots, mechanics and flight attendants -- ratified contracts that reduce labor costs by 15.8 percent. Each union took a different approach to achieving the savings, which include pay cuts, benefit changes and new work rules. The pay cuts approved were 3 percent for flight attendants, 5 to 5.5 percent for pilots and 8.5 percent for mechanics.
MAIR spokesman Jon Austin declined to elaborate on the rationale for executive bonuses, saying the "proxy filing speaks for itself." That filing also showed that Chief Financial Officer Robert Weil was paid $438,809, including a $217,000 bonus, and that general counsel Ruth Timm was paid $239,932, including a $102,000 bonus.
Liz Fedor * 612-673-7709 * [email protected]
© 2007 Star Tribune. All rights reserved.
The union decried executive bonuses at MAIR Holdings while Mesaba employees took pay cuts.
By Liz Fedor, Star Tribune
Mesaba Airlines used bankruptcy laws to extract pay cuts from its employees, but Paul Foley, CEO of Mesaba's former parent company, was given a $550,000 bonus for his performance during the Chapter 11 case.
In a regulatory filing Thursday, MAIR Holdings Inc. reported that it paid Foley nearly $1.1 million in compensation for the 2007 fiscal year that ended March 31. Mesaba was in bankruptcy during that entire period and ultimately was sold to Northwest Airlines in April.
"Paul Foley is the poster child for obscene executive compensation," Tom Wychor, chairman of the Mesaba pilots union, said in a Thursday interview.
"MAIR is a leech living off the pilfered earnings from Mesaba Airlines," Wychor said.
Mesaba filed for bankruptcy in October 2005, but its parent, Minneapolis-based MAIR, remained outside of the bankruptcy process.
While Mesaba was asking employees to accept 19.4 percent in labor cost cuts, Mesaba's unions noted that Mesaba paid MAIR $111 million in dividends between 2002 and 2004. When Mesaba filed for bankruptcy, MAIR had $120 million in cash and equivalents. That money remained off limits to Mesaba.
MAIR's compensation committee changed its criteria for executive compensation following the bankruptcy filing. So Foley and MAIR's other top executives were judged, in part, on retaining the company's capital, maximizing the return from the company's equity ownership of Mesaba and "obtaining a positive resolution to Mesaba's bankruptcy," according to a filing with the Securities and Exchange Commission.
For fiscal 2007, MAIR's board paid Foley a salary of $363,462 and a regular bonus of $350,000.
Foley was given a supplemental bonus of $200,000.
He received $156,779 in other compensation, including a $100,000 retention bonus that was specified in an employment contract he signed in 2004. Foley's total compensation for fiscal 2007 was $1,070,241, up from $720,087 in fiscal 2006.
"We were asked to give up compensation, whereas the company's leadership was given an opportunity to make more money. It is an unfair double standard," said Kris Pierson, secretary-treasurer of the Mesaba pilots union.
Last November, Mesaba's three large unions -- representing pilots, mechanics and flight attendants -- ratified contracts that reduce labor costs by 15.8 percent. Each union took a different approach to achieving the savings, which include pay cuts, benefit changes and new work rules. The pay cuts approved were 3 percent for flight attendants, 5 to 5.5 percent for pilots and 8.5 percent for mechanics.
MAIR spokesman Jon Austin declined to elaborate on the rationale for executive bonuses, saying the "proxy filing speaks for itself." That filing also showed that Chief Financial Officer Robert Weil was paid $438,809, including a $217,000 bonus, and that general counsel Ruth Timm was paid $239,932, including a $102,000 bonus.
Liz Fedor * 612-673-7709 * [email protected]
© 2007 Star Tribune. All rights reserved.
