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No Wonder DL Is In Trouble-Ron Allen's "contract"  
User currently offline767Lover From , joined Dec 1969, posts, RR:
Posted (9 years 5 months 5 days 22 hours ago) and read 8571 times:

Another example of poor financial decision-making:

Millions richer, ex-CEO departs Delta payroll

By RUSSELL GRANTHAM
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.
File

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.

RONALD ALLEN'S 'GOLDEN PARACHUTE'

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.


http://www.ajc.com/news/content/business/delta/0705/27allen.html

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 (9 years 5 months 5 days 22 hours ago) and read 8531 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, 1033 posts, RR: 0
Reply 2, posted (9 years 5 months 5 days 22 hours ago) and read 8512 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 (9 years 5 months 5 days 21 hours ago) and read 8423 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 (9 years 5 months 5 days 21 hours ago) and read 8391 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.



Tailwinds!!!
User currently offline1millionflyer From , joined Dec 1969, posts, RR:
Reply 5, posted (9 years 5 months 5 days 21 hours ago) and read 8390 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 (9 years 5 months 5 days 17 hours ago) and read 8251 times:

1mill,

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, 6733 posts, RR: 24
Reply 7, posted (9 years 5 months 5 days 17 hours ago) and read 8243 times:

1millionflyer,

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 (9 years 5 months 5 days 13 hours ago) and read 8157 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.

http://www.forbes.com/static/execpay...ry2=&passKeyword=&resultsStart=476


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