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Delta CEO's Pay Package: $8 Million  
User currently offlinegaystudpilot From United States of America, joined Dec 2007, 453 posts, RR: 7
Posted (3 years 4 months 3 weeks 6 days 6 hours ago) and read 7779 times:

Total 2010 compensation: 8M USD.

Source: http://www.ajc.com/business/delta-ceos-pay-package-930016.html

Worth it for DL shareholders?

Or another example of excessive executive compensation granted by to-close-for-comfort friends on the board's compensation committee?

Does anyone know how this compares with CEO compensation for non-US airlines?

[Edited 2011-04-30 09:59:44]

NOTE: "runaway" replaced with "excessive."


[Edited 2011-04-30 10:44:53]

51 replies: All unread, showing first 25:
 
User currently offlineFLALEFTY From United States of America, joined Jan 2006, 470 posts, RR: 3
Reply 1, posted (3 years 4 months 3 weeks 6 days 5 hours ago) and read 7687 times:

Quoting gaystudpilot (Thread starter):
Or another example of runaway executive compensation granted by to-close-for-comfort friends on the board's compensation committee?

I respectfully beg to differ.

Delta's CEO has been in charge of a very challenging job in merging two major airlines together into one, healthy international airline. And so far, he has succeeded. This not to say that he does not have many challenges left (fuel costs, an aging fleet, et. al.), but I think he has earned his money.

Its not like he has been running a Wall Street hedge fund.


User currently offlinealitalia744 From United States of America, joined Mar 2000, 4750 posts, RR: 45
Reply 2, posted (3 years 4 months 3 weeks 6 days 5 hours ago) and read 7627 times:

Of which the majority was stocks/options.

Tilton made $5.97MM, and so on...



Some see lines, others see between the lines.
User currently offlineLAXintl From United States of America, joined May 2000, 25443 posts, RR: 49
Reply 3, posted (3 years 4 months 3 weeks 6 days 5 hours ago) and read 7609 times:

Quoting gaystudpilot (Thread starter):
Does anyone know how this compares with CEO compensation for non-US airlines?

Runaway compensation?

Hardly. $8mil is rather cheap for basically a Fortune-100 company.

According to Business Week 2009 survey average Fortune-500 CEO's got almost $11mil in earnings.

Quoting gaystudpilot (Thread starter):
Or another example of runaway executive compensation

You cant compare to foreign markets as their local employment and business situations are different. You need to look inside America and how executive talent is retained and compensated across all industries.

There is certainly no reason why Mr. Anderson needs to stick with Delta if he is not well compensated. With his law background he can easily transition into other industries such as going back to health care again.

Anyhow to the specifics - Anderson's "salary" was merely $600,000 in 2010, the rest was essentially stock grants whose actual worth is unknown they are vested and sold. He very well could be sitting on pile of useless stock if the airline and industry tanks, or could do quite well in the future if the price appreciates.



From the desert to the sea, to all of Southern California
User currently offlinecatiii From United States of America, joined Mar 2008, 3031 posts, RR: 4
Reply 4, posted (3 years 4 months 3 weeks 6 days 5 hours ago) and read 7607 times:

Quoting gaystudpilot (Thread starter):
Total 2010 compensation: 8M USD.

Right, but break that down: "Chief Executive Richard Anderson's pay package included a $600,000 salary -- the same level as in 2009 -- along with stock awards valued at $6 million and $1.3 million in incentives. He also received $183,297 in other compensation such as retirement plan contributions, life insurance premiums, tax reimbursements, flight benefits and financial planning and home security services."

All in all for someone running the world's largest (for now) airline, it isn't that out of line. Anyone know what the stock award was struck at?


User currently offlineFlighty From United States of America, joined Apr 2007, 8551 posts, RR: 2
Reply 5, posted (3 years 4 months 3 weeks 6 days 5 hours ago) and read 7601 times:

It's actually not high pay for a CEO of a company with that level of complexity, size, employee count, tricky marketing, safety constraints. It's normal pay.

Airlines usually have the lowest paid CEOs in the Fortune 500. In some years, they virtually filled the ranks between #490 and #500.

Why?... usually because of union "scrutiny" of management practices, and the unusual power of ALPA and similar groups.. IMO. Other industries, including the car industry, don't have a union that grows offended when the CEO makes more than 2x what their members each make. It is always funny to me when unions complain their CEO makes $750k or some such, as if that's a lot for a CEO. For a hard job that only lasts a few years, $750k is really not "real money" in the scheme of things. It is upper middle class money. There are education commissioners who make $300k for decades on end, followed by an equal pension. Those people are richer than airline CEOs.


User currently offlineKGRB From United States of America, joined Sep 2010, 716 posts, RR: 1
Reply 6, posted (3 years 4 months 3 weeks 6 days 4 hours ago) and read 7520 times:

Quoting gaystudpilot (Thread starter):
Worth it for DL shareholders?

Uh, yeah! DL was bankrupt and about to be swallowed up by US when Richard Anderson came along. Anderson instead arranged a merger with a much more attractive partner, NW -- a merger that many consider the most successful in aviation history.

Under his leadership, the company shed unprofitable routes & excess aircraft and is now on the path to continued profitability. Well worth the minimal amount that they're paying him.

Quoting gaystudpilot (Thread starter):
Or another example of excessive executive compensation granted by to-close-for-comfort friends on the board's compensation committee?

If Anderson were in it for the money, he would've stayed at United HealthGroup where his compensation package was more than twice as big.

In an interview, he said he drives a Toyota Corolla, the same car I drive! I don't think many other Fortune 500 CEOs drive Toyotas...



Δ D E L T A: Keep Climbing
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 7, posted (3 years 4 months 3 weeks 6 days 4 hours ago) and read 7461 times:

Quoting KGRB (Reply 6):
Uh, yeah! DL was bankrupt and about to be swallowed up by US when Richard Anderson came along. Anderson instead arranged a merger with a much more attractive partner, NW -- a merger that many consider the most successful in aviation history.



I agree with your entire post except this part. I'd like to give credit where credit is due. Gerald Grinstein (known as JG around DL) is who staved off the US Airways hostile takeover. The Keep Delta My Delta! campaign was formed at the same time as well, as a direct result of US trying to buyout DL. JG also deferred pretty much his entire salary through the bankruptcy to the Delta Care Fund. The man had already made his millions as a railroader and he didn't need the money. He loved aviation and he loved Delta.

[Edited 2011-04-30 11:21:10]


What gets measured gets done.
User currently offlineFlighty From United States of America, joined Apr 2007, 8551 posts, RR: 2
Reply 8, posted (3 years 4 months 3 weeks 6 days 4 hours ago) and read 7426 times:

Quoting FlyASAGuy2005 (Reply 7):
He loved aviation and he loved Delta.

That is precisely the reason most airline CEOs are doing it (rather than quitting, and making 5-10x the money elsewhere).

It is a fun job. More fun than selling industrial chemicals or soft drinks.


User currently offlinecatiii From United States of America, joined Mar 2008, 3031 posts, RR: 4
Reply 9, posted (3 years 4 months 3 weeks 6 days 4 hours ago) and read 7375 times:

Quoting KGRB (Reply 6):
Uh, yeah! DL was bankrupt and about to be swallowed up by US when Richard Anderson came along. Anderson instead arranged a merger with a much more attractive partner, NW -- a merger that many consider the most successful in aviation history. Under his leadership, the company shed unprofitable routes & excess aircraft and is now on the path to continued profitability. Well worth the minimal amount that they're paying him.
Quoting FlyASAGuy2005 (Reply 7):
I agree with your entire post except this part. I'd like to give credit where credit is due. Gerald Grinstein (known as JG around DL) is who staved off the US Airways hostile takeover. The Keep Delta My Delta! campaign was formed at the same time as well, as a direct result of US trying to buyout DL. JG also deferred pretty much his entire salary through the bankruptcy to the Delta Care Fund. The man had already made his millions as a railroader and he didn't need the money. He loved aviation and he loved Delta.

Agreed. Richard Anderson has done some good things, but the fact of the matter is that he inherited a Delta that had already beaten off USAir under Grinstein's leadership, that had cleared its debt sheet through a Chapter 11 process under Grinstein's leadership, ans that had already begun a number of the modifications to customer service under Grinstein's leadership. The successes under Anderson's leadership are because of the work and foundation that Grinstein (and for that matter Bastian and Whitehurst) laid before Anderson was even on the BOD, let alone CEO.


User currently offlineKGRB From United States of America, joined Sep 2010, 716 posts, RR: 1
Reply 10, posted (3 years 4 months 3 weeks 6 days 4 hours ago) and read 7324 times:

Quoting FlyASAGuy2005 (Reply 7):
Gerald Grinstein (known as JG around DL) is who staved off the US Airways hostile takeover.
Quoting catiii (Reply 9):
he inherited a Delta that had already beaten off USAir under Grinstein's leadership,

I stand corrected. I didn't follow DL that much before the NW merger (NW, and to a lesser extent HP were "my" airlines) so I appreciate the info!



Δ D E L T A: Keep Climbing
User currently offlineFlighty From United States of America, joined Apr 2007, 8551 posts, RR: 2
Reply 11, posted (3 years 4 months 3 weeks 6 days 2 hours ago) and read 7155 times:

Quoting catiii (Reply 9):
The successes under Anderson's leadership are because of the work and foundation that Grinstein (and for that matter Bastian and Whitehurst) laid before Anderson was even on the BOD, let alone CEO.

That is problematic because almost half of today's DL came from NW, where Anderson was CEO for some years, before he became CEO of Delta, about a year prior to the merger. I think that gives him a large claim to the overall merger, having been CEO of both companies prior to the merger.


User currently offlinenwaesc From United States of America, joined Aug 2007, 3389 posts, RR: 9
Reply 12, posted (3 years 4 months 3 weeks 6 days 2 hours ago) and read 7108 times:

Halter and Hauenstein are much more responsible for DL's current success, and worth more than Anderson when it comes to compensation.


"Nothing ever happens here, " I said. "I just wait."
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 13, posted (3 years 4 months 3 weeks 6 days 2 hours ago) and read 7075 times:

Quoting nwaesc (Reply 12):
Halter and Hauenstein are much more responsible for DL's current success, and worth more than Anderson when it comes to compensation.



   I normly don't like to beat the guy up but i'd have to agree with you.

I also give a lot of credit to Ed Bastian. He's been there through it all and has a lot of clout on Virginia Avenue, considering he is the president of the company. He's also next in line to the CEO spot after RA retires and it will be well deserved.



What gets measured gets done.
User currently offlinecatiii From United States of America, joined Mar 2008, 3031 posts, RR: 4
Reply 14, posted (3 years 4 months 3 weeks 5 days 21 hours ago) and read 6726 times:

Quoting Flighty (Reply 11):
That is problematic because almost half of today's DL came from NW, where Anderson was CEO for some years, before he became CEO of Delta, about a year prior to the merger. I think that gives him a large claim to the overall merger, having been CEO of both companies prior to the merger.

I wasn't saying he didn't have a claim to the merger. The poster had commented that Anderson fended off the attempted USAir acquisition, and that when he arrived DL was in Chapter 11. Aside from that not being accurate, my overall point was that the Delta he inherited had been left in such good shape by Grinstein, Whitehurst, and Bastian that it put him in a position to be able to make the Northwest merger a success. If DL hadn't had its house in order the way it was when he took it over, the NW merger would have been harder to pull off and had many more problems then it did.


User currently offlinePacificWest From United States of America, joined May 2007, 77 posts, RR: 0
Reply 15, posted (3 years 4 months 3 weeks 5 days 20 hours ago) and read 6604 times:

Usually the board of directors decides the compensation... I don't know about you guys, but if I just lead an airline through one of the biggest mergers in industry history, and the board thought it was worth 8mill, I'd be like... "Ok, sure"

User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 16, posted (3 years 4 months 3 weeks 5 days 20 hours ago) and read 6564 times:

Quoting PacificWest (Reply 15):
Usually the board of directors decides the compensation... I don't know about you guys, but if I just lead an airline through one of the biggest mergers in industry history, and the board thought it was worth 8mill, I'd be like... "Ok, sure"

Yes, indeed they do. The proxy statement recently went out actually. Voting items will be executive level compensation and the make-up of the BOD members among other things.



What gets measured gets done.
User currently offlineSyrAlex From United States of America, joined Oct 2010, 32 posts, RR: 0
Reply 17, posted (3 years 4 months 3 weeks 5 days 16 hours ago) and read 5667 times:

[quote=gaystudpilot,reply=0]I respectfully beg to differ.

Delta's CEO has been in charge of a very challenging job in merging two major airlines together into one, healthy international airline. And so far, he has succeeded. This not to say that he does not have many challenges left (fuel costs, an aging fleet, et. al.), but I think he has earned his money.

Its not like he has been running a Wall Street hedge fund.[/quote


You hit it dead on what I was going to say. Richard Anderson has done a great job with Delta. Plus, didn't Delta make a decent profit in 2010?


User currently offlinemech24 From United States of America, joined Jul 2001, 61 posts, RR: 0
Reply 18, posted (3 years 4 months 3 weeks 5 days 3 hours ago) and read 4230 times:

All CEO's in this country are overpaid, including Richard Anderson!

User currently offlineKGRB From United States of America, joined Sep 2010, 716 posts, RR: 1
Reply 19, posted (3 years 4 months 3 weeks 5 days 3 hours ago) and read 4183 times:

Quoting mech24 (Reply 18):
All CEO's in this country are overpaid, including Richard Anderson!

Typical class warfare garbage.   Care to explain why you think that's the case?

This guy puts in 60 hour work weeks and has to deal with the stress of running the world's largest airline. Overpaid? Hardly.



Δ D E L T A: Keep Climbing
User currently offlinec5load From United States of America, joined Sep 2008, 917 posts, RR: 0
Reply 20, posted (3 years 4 months 3 weeks 5 days 3 hours ago) and read 4143 times:

Quoting KGRB (Reply 6):
In an interview, he said he drives a Toyota Corolla

I'm sure he does, and he probably parks it next to his Maserati and 5 other cars in his 7 car garage he probably has. He drives it when he doesn't take his private jet to work.   



"But this airplane has 4 engines, it's an entirely different kind of flying! Altogether"
User currently offlinebobnwa From United States of America, joined Dec 2000, 6477 posts, RR: 9
Reply 21, posted (3 years 4 months 3 weeks 5 days 2 hours ago) and read 4121 times:

Quoting c5load (Reply 20):
I'm sure he does, and he probably parks it next to his Maserati and 5 other cars in his 7 car garage he probably has. He drives it when he doesn't take his private jet to work.

Zip on the 7 car garage, zip on the Maserati and zip on the private jet. Any more?


User currently offlinecatiii From United States of America, joined Mar 2008, 3031 posts, RR: 4
Reply 22, posted (3 years 4 months 3 weeks 5 days 2 hours ago) and read 4091 times:

Quoting mech24 (Reply 18):
All CEO's in this country are overpaid, including Richard Anderson!

Putting aside the workers of the world unite sentiment for a moment, the fact of the matter is (presuming you work at Delta) both you and he filled out the same job application. You put AMT in the section where it asks what job you were applying for, he put Chief Executive Officer. The free market values your job differently then it values his job. You certainly could have applied to be CEO if you wanted to.

At the close of business on Friday Delta's market cap was just over $8,700,000,000.00. Looking at the breakdown of his compensation, he has a base salary of $600,000 plus an additional $185,000 in flight, health, life insurance, and security benefits. The rest of his annual compensation, as was noted by another poster, is in stock grants whose actual worth is unknown until the time they are vested and sold, and that presupposes that the company continues to perform well making them have any value. But for the sake of argument, his annual take home is $785,000 and that is pre-tax. Looking at the market cap of the company, his responsibilities relative to that company, and the percentage of his take home relative to the market cap, it isn't that over the top.

But I would ask you, what do YOU think the appropriate salary is for him to make, since you think he is over paid?

[Edited 2011-05-01 13:16:20]

User currently offlinesaab2000 From Switzerland, joined Jun 2001, 1610 posts, RR: 11
Reply 23, posted (3 years 4 months 3 weeks 5 days 2 hours ago) and read 4075 times:

Quoting catiii (Reply 9):
Agreed. Richard Anderson has done some good things, but the fact of the matter is that he inherited a Delta that had already beaten off USAir under Grinstein's leadership, that had cleared its debt sheet through a Chapter 11 process under Grinstein's leadership, ans that had already begun a number of the modifications to customer service under Grinstein's leadership. The successes under Anderson's leadership are because of the work and foundation that Grinstein (and for that matter Bastian and Whitehurst) laid before Anderson was even on the BOD, let alone CEO.

I'm not really sure that I'd call not paying your debts "Leadership" but I know that's what Ch. 11 Bankruptcy is - getting out of paying your debts.



smrtrthnu
User currently offlinecatiii From United States of America, joined Mar 2008, 3031 posts, RR: 4
Reply 24, posted (3 years 4 months 3 weeks 5 days 2 hours ago) and read 4062 times:

Quoting saab2000 (Reply 23):
I'm not really sure that I'd call not paying your debts "Leadership" but I know that's what Ch. 11 Bankruptcy is - getting out of paying your debts.

Going through a contentious Chapter 11 bankruptcy process while minimizing layoffs, preserving the company's obligations to the defined benefit plans, preserving the company's culture, and fending off a hostile takeover bid is, in fact, leadership.


25 incitatus : While I mostly find myself arguing on the same side as you, yes, most CEO's in the US are overcompensated. The set-up of compensation committees made
26 indiansbucs : Agree completely... and the very next words... are mine too.
27 seabosdca : Incorrect. He was given $1.3 million in incentive pay, which is cash. Lots and lots of people have a stressful job, lots of responsibility, and long
28 wnbob : Today, 8M is chum change. An suprised the guy hasn't left for greener pasture. Not to say it's good for the carrier, but then WOULD YOU work for the i
29 InnocuousFox : Some conspiricist tell you that at the office water cooler? You have absolutely no idea how executive selection and compensation work. Want to see ex
30 LAXintl : You could not be more wrong. Trust me when I tell you from my personal experience working over the years, senior executive pay is VERY competitive an
31 413X3 : Exactly. But on this site you are going to get a lot of people who by principle will deny it. Mostly because they are managers or executives themselv
32 413X3 : If you haven't been paying attention. The middle class is being drowned so executive compensation can skyrocket. And the sad part is, it's people who
33 Flighty : So you prefer they would hire bad people...? If you owned a business, would you want the freedom to recruit a leader and pay him/her as you saw fit?
34 incitatus : And if he goes, there will be plenty of similarly talented people willing to take his job for a lot less. The talent and skills of CEOs and several o
35 InnocuousFox : Holy crap... why don't you contradict yourself? First off, saying "similarly talented people" is like saying that all quarterbacks are as good as Tom
36 incitatus : A sports analogy is completely inappropriate. There are many well-paid CEO's that have terrible performance - and still get to keep their jobs. Every
37 catiii : Sionce everyone is so outraged at his compensation package, would someone who has been vocal on this thread about it please share what they think the
38 InnocuousFox : You don't watch sports, do you. There are plenty of guys that got a big contract at some point or another and now suck... but because of the contract
39 seabosdca : I have substantial experience in this area as well. Competitive, absolutely -- at least at the moment when execs are being recruited. Dependent on ma
40 InnocuousFox : Meh... that happens in IT gigs as well. It was well-documented amongst IT people here in Omaha (which is a very technical city) that the best way to
41 413X3 : You would think front line employees, the ones with direct customer contact, would be higher paid, right? Since they are responsible for a good custo
42 LAXintl : No, as such people come a dime a dozen. Have 10 job openings, and you'll get many hundreds of applications. Was it not United a few years back for 80
43 BMI727 : No employee anywhere is paid for customer service. They are all paid because their respective jobs help the company make money.
44 nwaesc : To find the "right now" candidate, sure. To find the "right" candidate, not so much. And lets not diminish the importance of customer service employe
45 wn700driver : Yeah, I think for how DL's been doing, it's a steal. This is very, very true. I spent many years in customer service mgmt myself, and I cannot begin
46 InnocuousFox : Which... admittedly, is assisted by good customer service.
47 incitatus : You are a male, aren't you? Sports analogies almost never belong to business, because most women cannot relate to them. Come on, move into the 21st c
48 catiii : Right, because that whole concept of teamwork, there's no "I" in team, etc. never get mentioned in a corporate or business setting... I really wish s
49 seabosdca : It's hard to say, because it's hard to know what CEO salaries would look like if boards were truly independent and aggressively dedicated to finding
50 BMI727 : Yes, but to somehow construe any customer service position as being more important to the company than back room tasks is a reach at best.
51 VC10er : I could not take the time tonight to read this entire thread. But I was shocked by how humble $8,000,000 is! If KGRB is right and he brokered and mer
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