Delta Beefs Up Board Governance Rules

December 11, 2003 ( - Several weeks after its CEO announced his unexpected resignation, Delta Air Lines said that it is strengthening some of its corporate governance measures involving its board.

According to a Reuters report, Atlanta-based Delta, the nation’s third-largest airline, said the changes include:

  • establishing independence standards for board members
  • revising principles involving the board’s composition, function, structure and responsibilities
  • electing a presiding director to chair the executive sessions of the board.

“These latest enhancements to the corporate governance program are intended to assure that Delta’s policies reflect recent developments, including the requirements of the Sarbanes-Oxley Act and the New York Stock Exchange’s new corporate governance listing standards,” Delta said.

Also, in response to two shareholder proposals that passed at the annual meeting in April, Delta said shareholder approval will be required for future large severance agreements providing benefits that are greater than 2.99 times salary and bonus.   In addition, the carrier will begin to expense stock options in 2005, once a financial accounting board has adopted a standardized valuation method.

In late November, Delta announced unexpectedly it had handed over the reins as CEO to board member Gerald Grinstein as of January 1, replacing Leo Mullin. Jack Smith, former head of General Motors, becomes chairman in April. Mullin, who headed Delta for six years, will receive a pretax retirement package of $16 million.