11/20/2017

Mar. 30, 2003: Delta Bonuses Would Make Enron Blush

What in the name of Orville and Wilbur Wright could Delta have been thinking!

At a time when young men and women have sacrificed careers to go fight a war on our behalf; when more than 8 million people are unemployed — many with no insurance or benefits — and millions more wonder if they, too, may soon be out of a job, the robber barons at Delta Air Lines decided this would be a jolly good time to reward themselves with bonuses that would have made Enron blush. Their reasoning? They want to keep their “leadership team” together. Here is the kind of leadership the team provided last year: Delta reported a $1.3 billion loss, a 58 percent drop in its share price and the elimination of 16,000 jobs and the people that go with them. Let’s hear it for the team!

With no public fanfare, the Atlanta-based company filed a document with the Securities and Exchange Commission last week, showing that Chairman and Chief Executive Officer Leo Mullin received his full salary of $795,000 along with a bonus of $1.4 million for the year 2002. With other compensation goodies, including stock options and long-term incentives, Mullin’s pay package totaled nearly $13 million. Delta also doled out $17 million in bonuses for its executive group as well as another $25.5 million to create special funds that will protect the pensions of 33 of the company’s top managers in the event of bankruptcy. I assume that if the airline should ever go belly up, the rest of the employees can just eat cake.

Let’s talk about leadership for a moment, because that seems to be a subject of much importance in the Delta executive suites these days. In my opinion, Delta wouldn’t recognize leadership if it came wrapped with a bow. Fancy titles and big bucks do not make leaders. Leaders inspire others to work hard by setting a good example themselves. How Delta executives think giving themselves huge bonuses will boost the morale of the rank-and-file employees at this time in the nation’s and the corporation’s history escapes me. (“Hey guys, I know it is 20 below zero outside, but let’s get the baggage off the plane as quickly as we can. We want to make Leo look good!”)

Nobody questions that the aftermath of the terrorist attacks and the war in Iraq hit the airlines hard. Commercial airplane travel is a tough business that demands tough decisions from management. My problem is that Delta is asking for sacrifice from their employees and money from the government while executives feather their own financial nests. The whole thing is as stupid as it is unconscionable.

Before I crossed the vale and became an ink-stained wretch, I spent four decades on the corporate side, most of it in public relations. I learned that corporations can be exceedingly insular. Rare is the company that looks at the world from the “outside in” to see how the public is going to react to what they do. Rather, they tend to look at the world from the “inside out.” If something makes sense to the executives, they assume everybody else thinks it makes sense, too. That obviously is what happened at Delta Air Lines.

Yet, I can’t believe the Delta brass didn’t calculate the enormous negative reaction they would hear from the public over their pay scheme. Did they discuss in the board room that while the pay raises were perfectly legal, the timing of their actions would demoralize employees, ensure universally negative reaction in the media and raise hackles in Congress at the very time that the airline industry is trying to coax another $3 billion in federal funds (also known as our tax dollars) from Washington to go with the $10 billion already authorized? Did they think that if they hunkered down, the whole mess would soon blow over? It makes you wonder just how smart this “leadership team” really is.

I hope the Delta executives enjoy their money. It has come at a steep cost to their reputations and to the reputation of a good company with decent, hard-working people. Frankly, they ought to be ashamed.