Northwest and Delta executives to make millions from bankruptcies

Since 2000, Delta has lost $10 billion, slashed 23,000 jobs and cut pay for pilots, executives and other employees. Three years ago the company spent more than $44 million setting up trusts to protect executives’ pension benefits from creditors in case of bankruptcy, saying the perk was needed to retain executives in hard times. Because transferring money to bankruptcy-proof trusts typically triggers big tax bills for the executives, Delta inflated the amounts to compensate for the extra taxes.

Retiring CEO Leo Mullin, who was paid $13 million in compensation in 2001, was given 22 years of instant seniority—although he worked for Delta for only five-and-half years—boosting his retirement package to $16 million. While incoming CEO Gerald Grinstein took a ceremonial pay reduction to bolster the company’s demands for sweeping employee wage and pension cuts, behind the scenes other executives were cashing in on the benefits of their golden parachutes.

Former CEO Ronald Allen, who was forced out in 1997, continued to draw $500,000 a year from Delta for consulting services up until 2005, although neither the company nor Allen would say whether he ever provided any such services. Allen’s exit package also included a $4.5 million cash severance payment and a $765,000-a-year pension that continues. He also got 10 years’ worth of perks, such as a 2,090-square-foot Buckhead, Georgia office, a car and club memberships provided by Delta.

When Northwest Airlines CEO Richard Anderson left the company last year, he took his pension in a lump-sum payment of $3,028,700. Anderson’s check covered three separate pensions he received from Northwest: the regular pension plan, his excess pension plan and his supplemental executive retirement plan, or SERP. Other top executives at Northwest, including current CEO Doug Steenland, also were guaranteed three pensions.

Union workers at Northwest have a pension plan based on years of service. For mechanics, custodians and cleaners—currently on strike against Northwest’s demands for the elimination of more than half their jobs and the replacement of traditional guaranteed pensions with 401(k) plans—that amounts to $85 a month for every year they work. According to the Aircraft Mechanics Fraternal Association (AMFA), a mechanic who retires at 65, after 40 years at Northwest, will collect about $40,000 a year.

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http://wsws.org/articles/2005/sep2005/nwa-s19.shtml