Airline's managers go leaner - Top-dollar deals of predecessors are gone
CHARLOTTE (Charlotte Observer) - A new crop of US Airways executives isn't getting the kind of deals given to predecessors.
While airline workers fume over bankruptcy court testimony about $35 million in pension payments to three former top executives, court documents filed late Thursday say current managers earn salaries of 60 percent to 70 percent of what their industry peers get.
Management bonuses and other perks have been eliminated through at least 2004, and there will be no bonuses for successful completion of the bankruptcy process.
US Airways Chief Executive Dave Siegel, 41, has seen his salary reduced to $600,000 from $750,000 and has given up a $750,000 bonus. The retirement plan he negotiated was wiped out in the bankruptcy process, leaving only a defined contribution plan.
Current managers, including Siegel, will divide 8 percent of the stock in US Airways when it emerges from bankruptcy court protection.
Under retirement plans negotiated when they joined the company in 1996, three former top executives -- Stephen Wolf, Rakesh Gangwal and Larry Nagin -- each were vested in the pension plan with 30 years of service. All three took lump-sum payouts.
Wolf retired at 60 as chairman and chief executive in March, receiving $15 million; he now serves without compensation as chairman. Gangwal resigned as president and CEO in 2001, receiving $15 million; he was 50. Nagin retired at 61 as executive vice president and general counsel, receiving $5 million.
Following the retirements, the airline has cut about 16,000 jobs and reduced union workers' annual wages and benefits by about $1 billion.
US Airways pilots, who agreed to $565 million in annual cuts, are fighting the airline's effort to terminate their pension plan. The airline says it can't afford the plan payments.
Considering this company's cash position, three people should not absorb $35 million, said Roy Freundlich, spokesman for the US Airways chapter of the Air Line Pilots Association.
Freundlich said the airline should exercise its right under bankruptcy law to retrieve the funds. The law allows for retrieval of payments made outside the normal course of business.
Airline spokesman David Castelveter declined to say whether the airline would seek a return of the money. But he noted it has not sought any returns from 318 pilots who have retired since 2000 with lump-sum pension payouts of more than $300 million. The largest was $2.4 million, he said.
Even with the pension payout, Wolf remains among the biggest losers in bankruptcy. Most of his compensation was in stock options and stock, none of which he sold. He holds about 2.5 million shares.
Valued at $83.25 a share during 1998, the stock is now worthless. Castelveter said neither Gangwal nor Nagin sold any shares either.
Still, Bill Wise, president of Charlotte Local 1725 of the International Association of Machinists, said the large pension payouts are classic cases of corporate greed.
You look at the exorbitant salaries and bonuses they give these people, then you see what they do for the people who make a company survive, Wise said. They kill your retirement, the cost of insurance goes up, and the ability to get the medication your doctor prescribed goes down.
CHARLOTTE (Charlotte Observer) - A new crop of US Airways executives isn't getting the kind of deals given to predecessors.
While airline workers fume over bankruptcy court testimony about $35 million in pension payments to three former top executives, court documents filed late Thursday say current managers earn salaries of 60 percent to 70 percent of what their industry peers get.
Management bonuses and other perks have been eliminated through at least 2004, and there will be no bonuses for successful completion of the bankruptcy process.
US Airways Chief Executive Dave Siegel, 41, has seen his salary reduced to $600,000 from $750,000 and has given up a $750,000 bonus. The retirement plan he negotiated was wiped out in the bankruptcy process, leaving only a defined contribution plan.
Current managers, including Siegel, will divide 8 percent of the stock in US Airways when it emerges from bankruptcy court protection.
Under retirement plans negotiated when they joined the company in 1996, three former top executives -- Stephen Wolf, Rakesh Gangwal and Larry Nagin -- each were vested in the pension plan with 30 years of service. All three took lump-sum payouts.
Wolf retired at 60 as chairman and chief executive in March, receiving $15 million; he now serves without compensation as chairman. Gangwal resigned as president and CEO in 2001, receiving $15 million; he was 50. Nagin retired at 61 as executive vice president and general counsel, receiving $5 million.
Following the retirements, the airline has cut about 16,000 jobs and reduced union workers' annual wages and benefits by about $1 billion.
US Airways pilots, who agreed to $565 million in annual cuts, are fighting the airline's effort to terminate their pension plan. The airline says it can't afford the plan payments.
Considering this company's cash position, three people should not absorb $35 million, said Roy Freundlich, spokesman for the US Airways chapter of the Air Line Pilots Association.
Freundlich said the airline should exercise its right under bankruptcy law to retrieve the funds. The law allows for retrieval of payments made outside the normal course of business.
Airline spokesman David Castelveter declined to say whether the airline would seek a return of the money. But he noted it has not sought any returns from 318 pilots who have retired since 2000 with lump-sum pension payouts of more than $300 million. The largest was $2.4 million, he said.
Even with the pension payout, Wolf remains among the biggest losers in bankruptcy. Most of his compensation was in stock options and stock, none of which he sold. He holds about 2.5 million shares.
Valued at $83.25 a share during 1998, the stock is now worthless. Castelveter said neither Gangwal nor Nagin sold any shares either.
Still, Bill Wise, president of Charlotte Local 1725 of the International Association of Machinists, said the large pension payouts are classic cases of corporate greed.
You look at the exorbitant salaries and bonuses they give these people, then you see what they do for the people who make a company survive, Wise said. They kill your retirement, the cost of insurance goes up, and the ability to get the medication your doctor prescribed goes down.
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