Beginning March 1, chairman and chief executive Leo Mullin and president and chief operating officer Fred Reid will take 10% pay cuts. In addition, all employees at the vice president level and above, approximately 50 people, will take an 8% reduction in pay, according to an Associated Press report.
However, the Atlanta-based airline woul d not provide details about whether the cuts would come from salary, benefits or bonuses nor did the company give an estimate as to how much money it expects to save as a result.
Delta’s 2001 proxy statement showed Mullin was paid $596,250 in salary and $1.6 million in stock. The same document also revealed Reid was paid $655,000 in salary and $607,212 in stock. Neither executive received a bonus in 2001 due to the combination of September 11-terrorist attacks and a lingering economic downturn that has placed the entire airline industry in the middle of a maelstrom of financial woes.
Recently, Delta’s executive vice president for Human Resources distributed a memo to employees stating workers below the vice president level should not expect pay increases. The memo also pointed to a possible reduction in pilots’ compensation, due to “events beyond our control. ” Pilots are Delta’s highest-paid employees next to executives, with many bringing in annual salaries in excess of $100,000.
The financial woes continue to pile on for the beleaguered transportation provider. In January, the company announced a $1.6-billion noncash charge at the end of the year for its underfunded pension plans.