New Delta Exec Announces No 2003 Cash Bonuses

That was one of a number of executive pay program changes announced in an employee memo, according to the Atlanta Journal Constitution. In the memo, soon-to-be CEO Gerald Grinstein said he wants to “clear the air” on the controversial issue.

Grinstein also announced that executives eligible for the first installment of separate retention bonuses in January will have the option of putting them off until Delta is profitable or 2007, whichever comes first. However, the memo also said executives who wish to get the payouts in January can do so.

A Delta spokesman said that is because of contractual agreements involving the retention payments. The payouts will range from 150% to 300% of salary, payable in three installments.

The memo also said Delta’s board is reconsidering its overall approach to executive compensation. Grinstein, a longtime board member, takes over for current Chief Executive Leo Mullin January 1. “Based on talks with many of you … I know that executive compensation remains a controversial issue,” Grinstein said in the memo. “As we move into the new year it is important for us to clear the air on that topic so we can focus all our energy on the urgent job of making Delta strong and profitable again.”

Grinstein was on the Delta board when it approved the executive perk packages for 2002. It included payouts totaling about $43 million in 2002. They included the cash performance bonuses to 60 executives as well as payments into special pension trust funds for 33 executives that would protect their enhanced benefits from creditors in the event of a bankruptcy filing.

The reports came as Delta, which lost $1.3 billion in 2002 and cut thousands of employees, appealed for more federal aid for airlines in Washington. The disclosures prompted Congress to add conditions on a new aid package that prohibited bonuses for the top two executives at any airline getting taxpayer help.

They also produced a blizzard of criticism from employees, customers and shareholders incensed that the airline would take steps to reward top executives amid cutbacks for workers and stockholders. The uproar wounded Mullin’s credibility in leading the airline through its financial crisis. Mullin, 60, abruptly announced his early retirement earlier this month.