Richard Anderson, offers rationale for executive bonuses
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Northwest CEO offers rationale for executive bonuses
Liz Fedor, Star Tribune
Published March 15, 2003 NWA15
Northwest Airlines CEO Richard Anderson justified the payment of management bonuses Friday by explaining that it is critical that we retain a knowledgeable, experienced leadership team.
In the company newsletter, Anderson responded to criticism from union workers who are upset that the company paid bonuses to hundreds of Northwest managers as it asks the rank-and-file for cuts in wages and benefits.
Anderson said executives got performance-based payments only if they reached individual and financial goals for 2002. 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. . . . No team is going to be competitive with a roster full of rookies, he said.
The Eagan-based carrier lost $1.2 billion during the past two years, and top executives are meeting with employee unions to request cuts in labor costs. In late February, the company said it wants to cut pilot costs by $2.76 billion over 6 1/2 years.
Union leaders said Friday they don''t think their members will buy Anderson''s rationale.
Jim Atkinson, president of Local 33 of the Aircraft Mechanics Fraternal Association (AMFA), said, It was the rank-and-file employees who made it possible for Northwest to achieve the goals he''s referring to. Does he think the executives operate the airline on their own?
Mollie Reiley, trustee of Teamsters Local 2000, which represents flight attendants, said, No matter how they paint it, our members will never understand how management can reward themselves with bonuses when our people are working twice as hard as they ever have and no one is talking to them about bonuses.
In his newsletter column, Anderson said, Performance pay is not a gift. He noted that executives receive a base salary and variable incentive pay that''s linked to attaining certain goals.
Because of the company''s finances, he said, Northwest cut the 2002 payouts for incentive compensation by 60 percent. Northwest spokesman Bill Mellon declined Friday to specify the total amount of performance payments and the number of people who get them.
Anderson also said Northwest''s management ranks have been cut by 26 percent since February 2001. That adds up to 1,300 managers. He stressed that those still on the payroll have made financial sacrifices. We canceled annual salary increases and all performance incentive pay for management in 2001, terminated the 401(k) match program and instituted a use-it-or-lose-it vacation policy, he said. All management health care plans require employee contributions.
Anderson said Northwest''s management compensation is the lowest among the six major network carriers.
John Massetti, a union official representing 17,000 Northwest ground workers, said his members also are paid below the industry standard.
The contract for the International Association of Machinists and Aerospace Workers (IAM) opened up in late February. In Northwest''s initial proposal, he said, the company attempted to gut existing benefits and work rules.
After reading Anderson''s column, Massetti said, As long as they are honoring their management agreements, we expect them to also honor the union contract agreements.
Liz Fedor is at lfedor@startribune.com.
Liz Fedor, Star Tribune
Published March 15, 2003 NWA15
Northwest Airlines CEO Richard Anderson justified the payment of management bonuses Friday by explaining that it is critical that we retain a knowledgeable, experienced leadership team.
In the company newsletter, Anderson responded to criticism from union workers who are upset that the company paid bonuses to hundreds of Northwest managers as it asks the rank-and-file for cuts in wages and benefits.
Anderson said executives got performance-based payments only if they reached individual and financial goals for 2002. 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. . . . No team is going to be competitive with a roster full of rookies, he said.
The Eagan-based carrier lost $1.2 billion during the past two years, and top executives are meeting with employee unions to request cuts in labor costs. In late February, the company said it wants to cut pilot costs by $2.76 billion over 6 1/2 years.
Union leaders said Friday they don''t think their members will buy Anderson''s rationale.
Jim Atkinson, president of Local 33 of the Aircraft Mechanics Fraternal Association (AMFA), said, It was the rank-and-file employees who made it possible for Northwest to achieve the goals he''s referring to. Does he think the executives operate the airline on their own?
Mollie Reiley, trustee of Teamsters Local 2000, which represents flight attendants, said, No matter how they paint it, our members will never understand how management can reward themselves with bonuses when our people are working twice as hard as they ever have and no one is talking to them about bonuses.
In his newsletter column, Anderson said, Performance pay is not a gift. He noted that executives receive a base salary and variable incentive pay that''s linked to attaining certain goals.
Because of the company''s finances, he said, Northwest cut the 2002 payouts for incentive compensation by 60 percent. Northwest spokesman Bill Mellon declined Friday to specify the total amount of performance payments and the number of people who get them.
Anderson also said Northwest''s management ranks have been cut by 26 percent since February 2001. That adds up to 1,300 managers. He stressed that those still on the payroll have made financial sacrifices. We canceled annual salary increases and all performance incentive pay for management in 2001, terminated the 401(k) match program and instituted a use-it-or-lose-it vacation policy, he said. All management health care plans require employee contributions.
Anderson said Northwest''s management compensation is the lowest among the six major network carriers.
John Massetti, a union official representing 17,000 Northwest ground workers, said his members also are paid below the industry standard.
The contract for the International Association of Machinists and Aerospace Workers (IAM) opened up in late February. In Northwest''s initial proposal, he said, the company attempted to gut existing benefits and work rules.
After reading Anderson''s column, Massetti said, As long as they are honoring their management agreements, we expect them to also honor the union contract agreements.
Liz Fedor is at lfedor@startribune.com.
coolflyingfool
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The only way managers can achieve their goals is if the employees below them perform. So how does the manager earn a bonus? This I have never understood.
Dea Certe
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Hey! US Airways is always looking for burnt-out, used up management types. I believe we hired a few of your hand-me-downs a few years ago. We got us batch of UAL's too. Surely you haven't forgotten Wolf and Gangwal? Just the other day, we hired Dutta.
I guess Old Airline Managers never die, they just slither over to US Airways where the livin' is easy and the bonuses are hefty!
I guess Old Airline Managers never die, they just slither over to US Airways where the livin' is easy and the bonuses are hefty!
Gonna make the concessions talk a waste of time. They just don''t get it. Have all of the front line employees (pilots, FAs, CSAs, RSAs, Mechanics, etc) stay home for just one day and see what happens to the airline...it''s called a shut down --- you think we''d miss anyone if the VPs and managers stayed home for a day or even a week??
The company has so far refused to discuss profit sharing or stock options with the rank and file yet continues to preach that we must bring our costs in line with Southwest...a company that offers profit sharing and stock deals to it''s employees -- hell, some of the WN pilots are practically millionaires due to their stock program...
I understand these bonuses were for 2002...a year when everyone was paid full scale and even received scheduled raises...I suppose if management was promised a certain package in 2002 they can/should expect to receive it as well...but they have to remember one thing...IT''S THE EMPLOYEES WHO MADE IT HAPPEN...without their hard work, with minimal and many times less than adequate staffing, the management acheived their goals...and for the most part, the managers had little to do with acheiving them.
The company has so far refused to discuss profit sharing or stock options with the rank and file yet continues to preach that we must bring our costs in line with Southwest...a company that offers profit sharing and stock deals to it''s employees -- hell, some of the WN pilots are practically millionaires due to their stock program...
I understand these bonuses were for 2002...a year when everyone was paid full scale and even received scheduled raises...I suppose if management was promised a certain package in 2002 they can/should expect to receive it as well...but they have to remember one thing...IT''S THE EMPLOYEES WHO MADE IT HAPPEN...without their hard work, with minimal and many times less than adequate staffing, the management acheived their goals...and for the most part, the managers had little to do with acheiving them.
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On 3/19/2003 7:46:26 PM NWACSA wrote:
I understand these bonuses were for 2002...a year when everyone was paid full scale and even received scheduled raises...I suppose if management was promised a certain package in 2002 they can/should expect to receive it as well...
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What about all of the furloughed pilots that were promised furlough pay (severance pay) in their contract. Even the latest round of pilots to be furloughed didn''t get their contractural furlough pay because NWA is still claiming force maneur. We can''t comply with contracts, but we can still pay management bonuses and raises! ABSURD!On 3/19/2003 7:46:26 PM NWACSA wrote:
I understand these bonuses were for 2002...a year when everyone was paid full scale and even received scheduled raises...I suppose if management was promised a certain package in 2002 they can/should expect to receive it as well...
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Meanwhile...all the talk of "bringing our labor costs in line with the low cost carriers"
James Parker, CEO Southwest Airlines, unargueably the most successful airline in the country was paid a salary of $312,000 last year... compare that with NW, DL, AA, UA and CO...all which claim they must pay the bigger bucks to keep the "quality" management.
Again, I think all-in-all NW management has done a decent job keeping us afloat but let''s get real.
James Parker, CEO Southwest Airlines, unargueably the most successful airline in the country was paid a salary of $312,000 last year... compare that with NW, DL, AA, UA and CO...all which claim they must pay the bigger bucks to keep the "quality" management.
Again, I think all-in-all NW management has done a decent job keeping us afloat but let''s get real.
Blackdog
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Just uttered from Chairman Gary Wilson:
Northwest Chairman Gary Wilson said cuts are on the way. "With the US Air bankruptcy, the United bankruptcy (and) with American having (either their) bankruptcy or agreements with workers, we''re going to drive the cost of labor down," he said. "The free market is working on that."
I guess he hasn''t spoken with our labor group leaders! It will be a cold day in hell before any of us agree to any pay cuts! All we can say is remember 1991 and all of those broken promises. Take us to bankruptcy court...let''s see what the judge says!
Northwest Chairman Gary Wilson said cuts are on the way. "With the US Air bankruptcy, the United bankruptcy (and) with American having (either their) bankruptcy or agreements with workers, we''re going to drive the cost of labor down," he said. "The free market is working on that."
I guess he hasn''t spoken with our labor group leaders! It will be a cold day in hell before any of us agree to any pay cuts! All we can say is remember 1991 and all of those broken promises. Take us to bankruptcy court...let''s see what the judge says!
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On 4/3/2003 1:33:13 PM Blackdog wrote:
Just uttered from Chairman Gary Wilson:
Northwest Chairman Gary Wilson said cuts are on the way. "With the US Air bankruptcy, the United bankruptcy (and) with American having (either their) bankruptcy or agreements with workers, we''re going to drive the cost of labor down," he said. "The free market is working on that."
I guess he hasn''t spoken with our labor group leaders! It will be a cold day in hell before any of us agree to any pay cuts! All we can say is remember 1991 and all of those broken promises. Take us to bankruptcy court...let''s see what the judge says!
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On 4/3/2003 1:33:13 PM Blackdog wrote:
Just uttered from Chairman Gary Wilson:
Northwest Chairman Gary Wilson said cuts are on the way. "With the US Air bankruptcy, the United bankruptcy (and) with American having (either their) bankruptcy or agreements with workers, we''re going to drive the cost of labor down," he said. "The free market is working on that."
I guess he hasn''t spoken with our labor group leaders! It will be a cold day in hell before any of us agree to any pay cuts! All we can say is remember 1991 and all of those broken promises. Take us to bankruptcy court...let''s see what the judge says!
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Not that I like the situation any better than anyone else, let''s be careful what you wish for. Having the contracts tossed out in bankruptcy court is very possible. The judge won''t care what happened in the past or if the employees don''t like it, he will look at it solely as a financial matter and for what it takes to bring NW in line with its competitors.
In a way, we are in a decent position. All of the other majors (namely US, UA, and AA) are setting the mark now...we can choose to negotiate for something in return for our givebacks or we can sit back and let a judge decide for us in court...I think the former is the way to go.
With 3 members of the BOD being union appointees, I can only hope we can trust them to guide us in the right direction or tell us that NW doesn''t need the cuts. With the industry in the worst shape it has ever been and all of the big 6 basically bankrupt on paper, I would venture to say its only a matter of time, one way or another, that we are forced to accept concessions. I can only hope that work rules are first considered, dropping some of the goofy "quick hour" rules and other things related to overtime that we can more easily live without.
Business is business, we, as employees, don''t like where we''re at right now but there''s not a whole lot that management could have done differently in the last 3-4 years that would change anything about where we sit now...if anything, we''re in a better position that our rivals thanks to some of their decisions. I''ve been critical of their bonuses and high salaries yet they still sit behind most of the other airline execs. A quote from USAirways CEO: "Good management is a lot less expensive than bad management" does ring true...just look at United.
