Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
No Wonder DL Is In Trouble-Ron Allen's "contract"  
User currently offline767Lover From , joined Dec 1969, posts, RR:
Posted (10 years 10 months 6 days 10 hours ago) and read 11709 times:

Another example of poor financial decision-making:

Millions richer, ex-CEO departs Delta payroll

The Atlanta Journal-Constitution
Published on: 07/27/05

One of the highest-paid people at Delta Air Lines is finally leaving the payroll — eight years after he left the company.

Ronald Allen was forced out as chairman and chief executive in 1997 but has continued to draw $500,000 a year from Delta for consulting services, although neither the company nor Allen will say whether he has provided any.

That fee has made Allen one of the top-paid people at the airline during its financial crisis. Current Chairman and CEO Gerald Grinstein draws a $450,000 salary, and last year he cut it to $250,000.

Now Allen's deal apparently ends. His multimillion-dollar early retirement package called for the consulting fee to last seven years, with an automatic extension to eight. Sunday marks eight years since Allen left.

Delta won't say whether it ever sought, or Allen ever offered, to shrink or curtail the fee to help fight the grinding slump that has forced job and pay cuts throughout the airline.

"The agreement with Mr. Allen ... has been honored and in no way amended or altered," said Delta spokesman Anthony Black, declining further comment.


Elements of the 1997 severance package:

• $500,000-per-year consulting contract for up to eight years, paid quarterly in advance ($4 million total).

• $4,586,515 lump-sum cash for severance payment, health benefits and incentive awards that were to be paid for 1997.

• $765,600-per-year pension, starting in 1997.

• Vesting of 298,000 stock options and restricted stock. He netted $6.3 million in the 1997 fiscal year after acquiring 89,000 shares, with remaining stock options then valued at $13 million.

• $210,000 in legal fees to prepare his retirement agreement.

• $25,000 per year fee as "advisory director" on Delta's board.

• Flight privileges for life for Allen and his family.

• An office and a full-time secretary in Buckhead's 24-floor Monarch Tower for 10 years. First-year cost was $91,099.

• $408,766 initial cost to design, construct and furnish the office.

• Membership for 10 years in the Commerce Club of Atlanta.

• Membership for 10 years in the East Lake Golf Club, as long as Delta maintains a corporate membership.

• Company car.

• $25,565 for residential security systems.


8 replies: All unread, jump to last
User currently offlineDAYflyer From United States of America, joined Sep 2004, 3807 posts, RR: 3
Reply 1, posted (10 years 10 months 6 days 10 hours ago) and read 11669 times:

Gee, maybe I should go run an airline into the ground....what a deal!  stirthepot 

One Nation Under God
User currently offlineCV580Freak From Bahrain, joined Jul 2005, 1035 posts, RR: 0
Reply 2, posted (10 years 10 months 6 days 10 hours ago) and read 11650 times:

Obviously better at bank robbery than consultancy Sad

One day you are the pigeon, the next the statue ...
User currently offlineDAL767400ER From , joined Dec 1969, posts, RR:
Reply 3, posted (10 years 10 months 6 days 9 hours ago) and read 11561 times:

Gotta love Golden Parachutes  banghead . Anyone cared to count all the different sums together? Just looking at all the numbers, it seems Allen has cost DL some $35 million in 8 years  bigmouth .

User currently offlineSkibum9 From United States of America, joined Nov 2001, 1229 posts, RR: 0
Reply 4, posted (10 years 10 months 6 days 9 hours ago) and read 11529 times:

Quoting 767Lover (Thread starter):
� $25,565 for residential security systems.

What in the heck kind of security system does this guy have? My security system is only $250 a year. His must have the same anit-aircraft protectin that the U.S. Navy uses on their ships, the Pheonix system.

User currently offline1millionflyer From , joined Dec 1969, posts, RR:
Reply 5, posted (10 years 10 months 6 days 9 hours ago) and read 11528 times:

That contract was from 8 years ago can we move on please?

Blah blah blah...someone made money...it's not fair.., this type of thread is surpassing Peter Max and NW DC-9 Replacement.

This salary is 0.0000333333% of sales.

Wow you are right, no wonder they can't make any money. LOL

[Edited 2005-07-27 16:20:13]

User currently offline767Lover From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 10 months 6 days 5 hours ago) and read 11389 times:


No, of course this contract isn't enough to run an airline into the ground. However, it does indicate something about the board of directors' lack of responsible financial decisions and contract negotiation. If they are as freewheeling with other contracts as this one, no wonder the airline can't make money while AA --which is larger-- turned a profit last quarter.

User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 7099 posts, RR: 23
Reply 7, posted (10 years 10 months 6 days 5 hours ago) and read 11381 times:


You are missing the point. The amount of money has no real impact on DL's finances, but it says a lot about DL's BOD. DL's BOD has created a culture where incompetent managers (Ron Allen and Leo Mullin) are rewarded for their stupidity.

Ron Allen was forced out because of his poor decision making skills and yet DL still rewarded him. The same is basically true for Leo Mullin.

I wouldn't have a problem with these rewards IF these CEO's had done something to deserve them.

User currently offlineRogerThat From United States of America, joined Dec 2003, 566 posts, RR: 0
Reply 8, posted (10 years 10 months 6 days 1 hour ago) and read 11295 times:

Today, Ron Allen's contract seems outrageous. But it might have been a typical CEO contract in the era in which it was negotiated.

Being an airline CEO these days ain't like it used to be. Look over this list from Forbes.com and I count 5 airline CEOs in the bottom 25. (CO, AA, WN, NW, DL) GG brings up the rear.

Interesting note: some of the lowest paid CEOs own significant stakes in their company.


Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
No Wonder IAH Is Closed To Spotters, Idiots Abound posted Mon Oct 27 2003 07:31:51 by Artsyman
Midway Airlines Is In Trouble posted Tue Aug 14 2001 08:27:17 by Fjnovak1
DL 757 In "97" Scheme? posted Tue Sep 5 2006 03:40:25 by KSUpilot
No Deal Reached For Mesaba--Court Is In Session posted Thu May 18 2006 22:12:51 by LUVRSW
U AIR: Is It In Trouble? posted Wed Jul 20 2005 03:57:43 by Kavanagh
Is Air Sahara In Trouble? posted Sat May 28 2005 01:52:08 by LAXDESI
How Come There Is No US Airways Club In FLL? posted Sat Apr 9 2005 05:24:46 by IslipWN
Is Virgin Blue In Trouble? posted Tue Dec 28 2004 07:42:38 by QantasPilot
Is Bwia In Trouble? posted Fri Dec 24 2004 19:48:05 by Jetdeltamsy
Is Air Luxor In Trouble? posted Tue Jul 20 2004 10:49:24 by VTprits