Northwest awarded executive bonuses in 2002
Thursday March 27, 2:59 pm ET
By David Bailey
CHICAGO, March 27 (Reuters) - Top executives at Northwest Airlines Corp. (NasdaqNM:NWAC - News) received performance bonuses in 2002 even as the air carrier reported a net loss of $798 million and later started talks with employee unions for labor cost cuts.
Labor groups for Northwest workers said on Thursday they were disappointed by the bonuses, noted officially just days after Northwest said it would lay off 4,900 workers temporarily because the U.S.-led war with Iraq has weakened bookings.
Northwest, the No. 4 U.S. air carrier, paid Chief Executive Richard Anderson a $500,000 salary, $250,000 bonus and $111,638 in other compensation, according to a proxy filed with the U.S. Securities and Exchange Commission (News - Websites).
Anderson also received restricted stock awards valued at more than $1.9 million, exercisable only if he remains with Northwest on vesting dates starting in February 2004.
The airline, based in Eagan, Minnesota, in January said it would look to cut costs anyway possible, including asking for labor concessions, to compete with low-cost airlines and rivals that were cutting labor costs under the bankruptcy process.
Northwest said it performed better than other large U.S. airlines and provided superior unit revenue and unit costs in 2002, a year where US Airways Group (OTC BB:UAWGQ.OB - News) and United Airlines (NYSE:UAL - News) declared bankruptcy and American Airlines parent AMR Corp. (NYSE:AMR - News) reported an industry record loss.
In a company newspaper, Anderson called performance pay based on targets a part of the executive package, not a gift.
In 2002, some of these targets were met or exceeded and thus Northwest was obliged to distribute performance pay, Anderson said. The fact that Northwest met its targets and outperformed the industry in 2002 is one of the reasons we are not in Chapter 11 and other airlines are.
Anderson received less up-front cash than some leaders of other large U.S. airlines. Continental Airlines Inc. (NYSE:CAL - News), the No. 5 U.S. carrier, paid Chairman and Chief Executive Gordon Bethune a salary and bonus totaling about $1.7 million.
Delta Air Lines Inc. (NYSE
AL - News) Chairman and Chief Executive Leo Mullin''s salary, bonus and other compensation totaled about $2.2 million in 2002, while US Airways Chief Executive David Siegel''s similar compensation totaled more than $1.4 million.
Delta is the No. 3 U.S. air carrier, while US Airways is No. 7, having slipped back a bit in bankruptcy.
SHOCK, DISAPPOINTMENT
I don''t know how they siphon off money for executives while putting thousands of Minnesotans out of work, said Jim Atkinson, president of Local 33 of the Aircraft Mechanics Fraternal Association.
A Northwest spokesman declined to comment on the remarks from the airline''s union representatives.
The latest temporary cuts include more than 2,000 AMFA workers, mostly mechanics, 250 pilots represented by the Air Line Pilots Association (News - Websites) and 830 other workers represented by the International Association of Machinists.
Pilots have expressed astonishment over the bonuses and compensation increases, ALPA spokesman Will Holman said. Management is asking labor to take unprecedented cuts, while management gives themselves these bonuses.
Northwest pilots are reviewing an airline proposal for labor cost cuts outside contract talks, which are set to begin officially in July. Even if pilots find cuts necessary, all stakeholders will be expected to participate, Holman said.
(Northwest is) saying that the cost of labor is a problem, but if it is such a problem, why are they giving executives incentives and packages, said Robert De Pace, president and directing general chair of District 143 of the International Association of Machinists.
The IAM has five separate agreements with Northwest that became amendable in February covering ramp workers, agents and others. Talks have been limited to a presentation on the financial situation so far, De Pace said.
Thursday March 27, 2:59 pm ET
By David Bailey
CHICAGO, March 27 (Reuters) - Top executives at Northwest Airlines Corp. (NasdaqNM:NWAC - News) received performance bonuses in 2002 even as the air carrier reported a net loss of $798 million and later started talks with employee unions for labor cost cuts.
Labor groups for Northwest workers said on Thursday they were disappointed by the bonuses, noted officially just days after Northwest said it would lay off 4,900 workers temporarily because the U.S.-led war with Iraq has weakened bookings.
Northwest, the No. 4 U.S. air carrier, paid Chief Executive Richard Anderson a $500,000 salary, $250,000 bonus and $111,638 in other compensation, according to a proxy filed with the U.S. Securities and Exchange Commission (News - Websites).
Anderson also received restricted stock awards valued at more than $1.9 million, exercisable only if he remains with Northwest on vesting dates starting in February 2004.
The airline, based in Eagan, Minnesota, in January said it would look to cut costs anyway possible, including asking for labor concessions, to compete with low-cost airlines and rivals that were cutting labor costs under the bankruptcy process.
Northwest said it performed better than other large U.S. airlines and provided superior unit revenue and unit costs in 2002, a year where US Airways Group (OTC BB:UAWGQ.OB - News) and United Airlines (NYSE:UAL - News) declared bankruptcy and American Airlines parent AMR Corp. (NYSE:AMR - News) reported an industry record loss.
In a company newspaper, Anderson called performance pay based on targets a part of the executive package, not a gift.
In 2002, some of these targets were met or exceeded and thus Northwest was obliged to distribute performance pay, Anderson said. The fact that Northwest met its targets and outperformed the industry in 2002 is one of the reasons we are not in Chapter 11 and other airlines are.
Anderson received less up-front cash than some leaders of other large U.S. airlines. Continental Airlines Inc. (NYSE:CAL - News), the No. 5 U.S. carrier, paid Chairman and Chief Executive Gordon Bethune a salary and bonus totaling about $1.7 million.
Delta Air Lines Inc. (NYSE
AL - News) Chairman and Chief Executive Leo Mullin''s salary, bonus and other compensation totaled about $2.2 million in 2002, while US Airways Chief Executive David Siegel''s similar compensation totaled more than $1.4 million.Delta is the No. 3 U.S. air carrier, while US Airways is No. 7, having slipped back a bit in bankruptcy.
SHOCK, DISAPPOINTMENT
I don''t know how they siphon off money for executives while putting thousands of Minnesotans out of work, said Jim Atkinson, president of Local 33 of the Aircraft Mechanics Fraternal Association.
A Northwest spokesman declined to comment on the remarks from the airline''s union representatives.
The latest temporary cuts include more than 2,000 AMFA workers, mostly mechanics, 250 pilots represented by the Air Line Pilots Association (News - Websites) and 830 other workers represented by the International Association of Machinists.
Pilots have expressed astonishment over the bonuses and compensation increases, ALPA spokesman Will Holman said. Management is asking labor to take unprecedented cuts, while management gives themselves these bonuses.
Northwest pilots are reviewing an airline proposal for labor cost cuts outside contract talks, which are set to begin officially in July. Even if pilots find cuts necessary, all stakeholders will be expected to participate, Holman said.
(Northwest is) saying that the cost of labor is a problem, but if it is such a problem, why are they giving executives incentives and packages, said Robert De Pace, president and directing general chair of District 143 of the International Association of Machinists.
The IAM has five separate agreements with Northwest that became amendable in February covering ramp workers, agents and others. Talks have been limited to a presentation on the financial situation so far, De Pace said.
