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US Airways Wants Judge To Approve Exec Bonuses  
User currently offlineMurf From United States of America, joined Nov 2000, 144 posts, RR: 0
Posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1779 times:

What do you all think of this?

http://www.thepittsburghchannel.com/News/1608413/detail.html

If you need to file bankruptcy,
and you need employee concessions,
and you can't afford to pay your creditors,
and your losing millions of $ per quarter,
and your laying off employees,
and your seeking goverment backed loans,
just to stay in business,

then you probably can't afford, and shouldn't be asking for executive bonuses.







35 replies: All unread, showing first 25:
 
User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 1, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1774 times:

Executive bonuses are a big part of their income. Base salary for many executive is quite low... but the overall compensation package is what makes the job attractive (bonuses that are incentive-based as well as stock options). The bonuses the US Airways management want approved are lower than originally planned and will serve to retain management in a time when management jumping ship would only cause more panic with stockholders. Remember, bonus is a large part of many executives' pay. They are depending on it.

User currently offlineLowfareair From , joined Dec 1969, posts, RR:
Reply 2, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1762 times:

Executive bonus is similar to tips at a restaurant, only it isn't based on how well you do.

User currently offlineBobcat From United States of America, joined Jun 2007, 0 posts, RR: 0
Reply 3, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1757 times:

I forgot where I heard this one...

US Airways execs went to the bankruptcy courtroom asking
for more exec bonus.... the judge had to throw them out
because their balls took up all the room in the courtroom...

:D  Big grin  Big grin  Big grin  Big grin  Big grin  Big grin


User currently offlineBobcat From United States of America, joined Jun 2007, 0 posts, RR: 0
Reply 4, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1755 times:

ah... I just remembered where I heard the above joke...

They were talking about Enron execs asking the same thing...  Big grin


User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 5, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1753 times:

Executive bonus is similar to tips at a restaurant, only it isn't based on how well you do.

Depends on the company. At most companies, it isn't a guaranteed set number they always get. They get a certain percentage of base pay as a bonus dependant upon hitting certain numbers like sales targets or revenue targets (As would be in the case of US Airways). Most executive bonuses are based mostly on how their own department did, and if they were able to meet their own numbers, not completely the company as a whole.


User currently offlineFlashmeister From United States of America, joined Apr 2000, 2903 posts, RR: 6
Reply 6, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1749 times:
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US Airways executives deserve zero pay. In fact, if I were the judge, I'd not only yank the bonuses, but I'd revoke their corporate cards, company cars, travel passes, and country club memberships, and then I'd reduce their salary to the most junior reservations agent's level.

The CEO and Executives of publicly-traded corporations exist to serve the interests of shareholders, and US management has time and time again taken action that is not only not FAVORABLE for investors, but DETRIMENTAL to the value of their equity stakes.

If David Siegel really wants to gain some points and show some leadership, he'll refuse his salary pending the airline's emergence from Chapter 11. Make him put his money where his mouth is. If he refuses to do it, I'd say that signals a less-than-confident outlook, at which point they should just convert to Chapter 7 and be done with this experiment gone bad.


User currently offlineMurf From United States of America, joined Nov 2000, 144 posts, RR: 0
Reply 7, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1744 times:

Seiple,

I disagree with your statement on base salary being low. (Unless you think these numbers are low)
http://www.ecomponline.com/company.tcl?dir=Demo&compid=5865
I think these are great base salaries.

I agree, bonuses are a large part of the overall executive package, but these are different times, which calls for different measures. A lot of company bonuses are based on performance, right now US Airways is not performing, hense no bonuses should be offered.

If they are as confident as they say they are about emerging from bankruptcy early next year, then wait until next year for the bonuses. Bringing a company out from bankruptcy and making it profitable again should be rewarded with a fat bonus.

Doing a job that got this company in this situation is not deserving of one.
9/11 is not an excuse, they were losing money before 9/11. just like UAL.



User currently offlineHaveric From United States of America, joined Jan 2001, 1247 posts, RR: 4
Reply 8, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1744 times:

A high perecentage of US Airways executives are new to the company. There has been significant turnover since Wolf / Gangwal left. Well, Wolf is still around, but many of his cronies have moved on.
For U to maintain their more recent hires who possess the expertise to turn the company around, they need to pay them. Poorly paid executives will become underqualified executives. At this time, sharp leadership is crucial to keeping the airline afloat.

Eric


User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 9, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1740 times:

Murf:
When compared to average blue-collar Americans, of course they are high.
However, when in that corporate world, it is a different level of comparison.


User currently offlineFlashmeister From United States of America, joined Apr 2000, 2903 posts, RR: 6
Reply 10, posted (12 years 4 months 2 weeks 3 days 18 hours ago) and read 1728 times:
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Poorly paid executives will become underqualified executives. At this time, sharp leadership is crucial to keeping the airline afloat.

Fine, pay them in deferred compensation once certain targets are met down the road, or better yet, pay them a nominal (again, the level of a junior CSR) salary and the rest in stock at 50c/share. If they want pay, then they better get the stock price up, plain and simple. Make them work for their money -- lord knows that the rampers and mechanics, etc., do...


User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 11, posted (12 years 4 months 2 weeks 3 days 17 hours ago) and read 1720 times:

They are only requesting a portion of the bonuses, already delayed as they are. I see a strong aversion on these boards to people who make more than the average person. Not that I'm surprised, though. Curious why an executive should have their pay lowered to $20,000-$40,000 a year when their job requires a lot more intricate knowledge, experience, non-set hours working, stress, court/hearing appearances, and responsibility than the average hourly worker who does the same job hour in, hour out. Perhaps stock options at the current price is a good idea... but I suspect people on here would cry foul when the stock gets up to where it used to be and these execs sell to cash in on their bonuses ("They are already paid enough! Why are they getting this! Outrage! Scandal!").

User currently offlineFlashmeister From United States of America, joined Apr 2000, 2903 posts, RR: 6
Reply 12, posted (12 years 4 months 2 weeks 3 days 17 hours ago) and read 1710 times:
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I suspect people on here would cry foul when the stock gets up to where it used to be and these execs sell to cash in on their bonuses

I disagree. If Siegel & Company can get the stock back up to the double-digits (representing a 2000% return at $10/share), then they deserve every penny of the stock. Shareholders will recognize this, the board will recognize this, and they'll shower Sigel & Co. with money, and rally behind him for future initatives.

On the other hand, if the stock goes to 10c/share (representing a -80% return), they also deserve that, and they deserve the termination agreement that would be struck as the corporation is liquidated.

The argument is this: "My employment contract says that I get $xxxxxx in compensation and by-God, I want my money because that's the deal I negotiated." Executives who present this argument are simply stupid.

Pilots, FAs, and other workers have agreed to this argument: "My employment contract says that I get $xxxxxx in compensation, but since times are tough, we'll give some of that money back."

Why should execs be immune to the give-backs?

The amount, timing, or reasons for the bonus are all irrelevant. It is nothing less than lunacy to first go to the well and ask for money back from your employee groups, then piss in the well by allowing corporate fat-cats to take more money from the allegedly-upside-down corporate coffers.

If I was a US employee, I'd be livid. NONE of these execs are on food stamps: they would gain a lot of employee and shareholder trust by dropping this ridiculous money grab and joining their employees in spreading the pain around. If the execs don't believe -- or trust -- that they can turn the airline around and reap their benefits in the future, then what in hell are they doing running the airline in the first place?


User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 13, posted (12 years 4 months 2 weeks 3 days 8 hours ago) and read 1643 times:

The execs are taking a proportionate compensation hit.... they are asking for a portion of the bonus, not the full thing. The unions, which didn't go easily, took a cut and the management is taking a proportionate pay cut through not getting their full bonus, which they did hit at least some numbers to earn.
Then again, all upper class people are evil.


User currently offlineEA CO AS From United States of America, joined Nov 2001, 13766 posts, RR: 61
Reply 14, posted (12 years 4 months 2 weeks 3 days 5 hours ago) and read 1612 times:
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Airline executives tend to not have the same degree of loyalty to a company that the rank and file employees do. Consequently, if you're a finance guy working for US Airways and you know you can make 50% better money by working elsewhere, you're probably going to jump ship. Since US needs to retain bright and talented people, they have to make sure they offer attractive salary and benefits packages to keep them around.

While it may sound harsh, it's a lot easier (and cheaper!) to replace a res agent or gate agent than it is to replace a senior executive. And since everyone knows that US is on the ropes, they've become an attractive target for headhunters and recruiters seeking to lure some of their people away.

So it's absolutely appropriate for management to seek extra cash for executive bonuses. It's not real popular with the rank and file employees, but then again they tend (for the most part) to have a "Hey...that's not fair!" attitude about things that benefit anyone other than themselves.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineLMP737 From , joined Dec 1969, posts, RR:
Reply 15, posted (12 years 4 months 2 weeks 3 days 5 hours ago) and read 1597 times:

Can't say that I'm surprised. It really doesn't matter if an executives base pay is "low", (like Sieple says) if you ask employees to make concessions you had better defer any sort of bonus. These execs/managers will just have to make due with their "low pay". I can think of nothing that would damage employee moral more at US Airways than for them to see execs get bonuses while they take pay cuts and see their friends lose their jobs.

In the 90's executive pay skyrocketed while the pay of your average worker only went up slightly. With the recent events in corporate America I hope the days of obscenely large pay packages for execs is a thing of the past.


User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 16, posted (12 years 4 months 2 weeks 3 days 4 hours ago) and read 1573 times:

LMP737:

Executives and hourly workers are two completely different things. Hourly workers get their entire compensation through base pay. Executives have their pay split. Basically, deferring bonuses asks executive to take roughly a 40 to 60% pay cut. I don't see the unionized workers taking that big of a hit.


User currently offlineAA717driver From United States of America, joined Feb 2002, 1566 posts, RR: 13
Reply 17, posted (12 years 4 months 2 weeks 3 days 4 hours ago) and read 1557 times:

Considering that the state of the airline industry(worldwide) is in the toilet, few airline CEO's or senior management really deserve anything close to what they have been getting paid. If I keep running airplanes into the ground or getting lost consistently, will I keep getting paid more and more?

U and UAL are perfect examples. Ed Colodny wasn't a genius--he was just at the right place at the right time and took advantage of the situation. In fact, by merging with Piedmont he may well have started U on it's downward spiral.
PSA didn't help. Seth Schofeld inherited a bad economy and the result of the Piedmont and PSA acquisitions. I think running U during that period would have exceeded Herb K's. abilities.

Anyone who didn't know what Steven(Don't call me Steve) Wolf's method of operation was and his history was either blind, ignorant or both. U got what it paid for in that case. What was that old song..."you knew I was a snake when you took me in..."

The drive to merge U and UAL to the exclusion of all else would probably have driven both these companies to their current financial state without 9/11. UAL has not had 'full-time' management for 10 years now.

Herb, Bethune, Crandall and the guy running JetBlue are the only people I can think of who deserve big bucks for what they have done. IMO.TC



FL450, M.85
User currently offlineLowfareair From , joined Dec 1969, posts, RR:
Reply 18, posted (12 years 4 months 2 weeks 3 days 2 hours ago) and read 1519 times:

>>If I keep running airplanes into the ground or getting lost consistently, will I keep getting paid more and more?<<

Of course you will. You're union!

>>Herb, Bethune, Crandall and the guy running JetBlue are the only people I can think of who deserve big bucks for what they have done.<<

Joe Leonard at FL really turned things around. He has got good labor relations, and has saved the airline from bankruptcy(they had 10 million in cash when he came on board, now they have over 130 million).


User currently offlineFlashmeister From United States of America, joined Apr 2000, 2903 posts, RR: 6
Reply 19, posted (12 years 4 months 2 weeks 3 days 1 hour ago) and read 1499 times:
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deferring bonuses asks executive to take roughly a 40 to 60% pay cut

I still don't care.

Having bonuses being half or more of compensation is part of the problem. Companies are hiding compensation in these bonus packages that require little disclosure and are largely hidden from the public eye.

Pay people cash. Give them a salary and then a bonus if they EXCEED expectations. The word BONUS typically means compensation above and beyond normal. BONUS then should require work above and beyond normal, which has not occurred.

So, the bonuses are gone. Zero. Zilch. If that means 40-60% cuts for these poor little execs, maybe they shouldn't have been such a dumb SOB to sign a contract where so much of their compensation is so discretionary in nature.


User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 20, posted (12 years 4 months 2 weeks 3 days 1 hour ago) and read 1489 times:

Flashmeister,

You want executives to work for their money. Yet you say they should just be given all of it cash. With bonuses, they do have to work for their money as it is dependant on how well they do their jobs (and bonus percentages are set in the contract, usually not completely discretionary numbers except as decided by a board of directors). Having bonuses be a large portion of compensation is a good thing. They then have more of an interest in the operation of the company, not an attitude like most with fixed hourly wages who will get the same pay for the same length of working time no matter how much or how little effort they put into it.

Then again, if you'd like to just give all whose pay is dependant on bonuses a salary raise equivalent to what they could receive in bonus (the maximum) I'm sure none of those execs would argue with you. It would make the level of effort and work required on their behalf less as you remove some incentive.

Take two hourly workers, each making $15.00 per hour. No matter how productive they are, or how far above the normal duty one goes, they both still get paid the same. Take two executives. One puts minimal effort into effecting change and decreasing costs, the other is proactive and takes the extra steps to improve the whole department and help the company. Both did what minimum had to be done but one did more, helping the company. Should they both be paid the same?

Unlike most workers, high executives in corporations like US Airways aren't easily replaceable by any person off the street. You can't just grab some walk-in, give them a few hours of training, and set them to work. Being the head of a corporation requires great experience, education, and usually some level of intelligence. If executives start bailing, that's a bad sign for the company and the stockholders will become nervous, which is not in the company's best interests. As others here have stated, it is in US Airways' best interest to retain these folks.

Not everybody gets a bonus. Only those, who as you say, exceed expectations receive one. They have to hit some sort of number in order to receive. At US Airways, I'm sure there are execs who won't get a bonus because they didn't earn it. Those who have one coming earned it, as they went above the expectations as specified by their contract.

I'm sorry you're jealous of their pay.


User currently offlineFDXmech From United States of America, joined Mar 2000, 3251 posts, RR: 34
Reply 21, posted (12 years 4 months 2 weeks 3 days 1 hour ago) and read 1477 times:

>>>If they want pay, then they better get the stock price up, plain and simple. Make them work for their money -- lord knows that the rampers and mechanics, etc., do...<<<

I disagree, this is what got corporate America in trouble in the first place.
If they want pay, then they had better come up with a successful business plan and implement it.

IMO the chase to raise stock prices as first and foremost puts the cart in front of the horse. Run a successful airline and increased stock prices will follow.

By emphasizing raising stock prices as the primary goal in executive compensation, some execs will put the airlines long term viability in jeapordy in favor of a favorable quarterly earnings report (selling off viable assets, layoffs, etc).




You're only as good as your last departure.
User currently offlineHeavymetal From , joined Dec 1969, posts, RR:
Reply 22, posted (12 years 4 months 2 weeks 3 days ago) and read 1469 times:

Having bonuses be a large portion of compensation is a good thing.

It isn't if the "bonuses" are written in to be all but guaranteed, which I sense is kinda what you're defending.

However, when in that corporate world, it is a different level of comparison.

There is a different level of justice, too, one that many Americans believe has gone from "business" to unadulterated "aristocracy". A simple look at history shows that for most of the past in corporate America, cheif executives did in fact make or break their careers on the decisions they made. Now youre asking me to believe that consequences should be irrelevent in how these people are allowed to earn their living. Sorry. Won't do it.

Also your socialista model assumes one of the two workers knows what the hell he's doing.

Unlike most workers, high executives in corporations like US Airways aren't easily replaceable by any person off the street.

Don't believe the hype. Maybe not Joe Shmoo off the street...but get me a collection of some young, eager community college business types from out in the heartland of America...and dollars to donuts they come up with as viable a plan to run US Airways as the dolts who have been these past few years. .

Being the head of a corporation requires great experience, education, and usually some level of intelligence.

You're right. It also requires the intellect to make the right choices. AND....the integrity to fess up to making the wrong ones. Corporate America has institutionalized the "oh well we tried" game. It wants gobs of cash ....as a consolation prize!

Not everybody gets a bonus. Only those, who as you say, exceed expectations receive one. They have to hit some sort of number in order to receive

You make that sound like a noble thing. What if "hitting that number" requires you to skimp on operating budget, incentives for your own underlings, basic tools to make your organization more efficient? I personally work in a company where middle managers are squeezing budgets to make their bonuses...as a result, the quality of their company's work is suffering because there are too few people doing to many jobs....without the right tools to do them.

I'm sorry you're jealous of their pay.

They're the ones who have to live with the knowledge they couldn't pull it off. They didn't win. They lost. They suck. I'm jealous of that?



User currently offlineSeiple From , joined Dec 1969, posts, RR:
Reply 23, posted (12 years 4 months 2 weeks 3 days ago) and read 1457 times:

A few questions for you:
Don't believe the hype. Maybe not Joe Shmoo off the street...but get me a collection of some young, eager community college business types from out in the heartland of America...and dollars to donuts they come up with as viable a plan to run US Airways as the dolts who have been these past few years.

Yes, but will they get hired into high positions at a corporation like US Airways? Probably not. The hype, while misplaced, is a basis for how many executives are chosen. Whether it is correct thinking or not, tell me how likely it is the US Airways board of directors hires some 20 year old right out of community college into one of the high echelons of management. It is very unlikely. Most Harvard or Wharton graduates wouldn't even get chosen for the job. Background, experience, and having the right connections is what chooses many of these high execs, whether it be correct or not. If we were in an ideal world, what you say would be plausible. However, the way the business world operates today.... the proverbial "second interview" isn't going to be had by the person you use in your example.

Is a financial institution more likely (in practicality, not idealism) to grant loan extensions, or a loan period, to a company headed by somebody with industry experience and education from a top school or the newly-graduated-from-community-college exec with little or no experience but a lot of good ideas?


You make that sound like a noble thing. What if "hitting that number" requires you to skimp on operating budget, incentives for your own underlings, basic tools to make your organization more efficient? I personally work in a company where middle managers are squeezing budgets to make their bonuses...as a result, the quality of their company's work is suffering because there are too few people doing to many jobs....without the right tools to do them.

It may happen, or it may not. It depends on the person and the company. Of course there are some who sacrifice personnel, the proper equipment, and other necessities for their bonuses. However, I'm saying an exec should receive the bonus as specified in their contract. They have a contract of employment just like those pilots do.


User currently offlineLMP737 From , joined Dec 1969, posts, RR:
Reply 24, posted (12 years 4 months 2 weeks 3 days ago) and read 1446 times:

Sieple:

You haven't seen unionized workers take that big of a hit? Guess you don't work for an airline then. Because if you would not have made such a comment. I've seen quite a few people at my airline, and others, lose their job.

What is a bonus? The dictionary defines it as "reward, additional compensation". If your an executive at a company with the problems US Air has by definition you don't deserve a bonus. It's been a sore point with a lot of people seeing executives who do not do their jobs still getting bonuses. So go ahead and give those execs/managers their bonuses and see what happens to moral at US Air.


25 Flashmeister : Seiple: You want executives to work for their money. Yet you say they should just be given all of it cash. No. I just want 'guaranteed' compensation t
26 FDXmech : AA717driver: Herb, Bethune, Crandall and the guy running JetBlue are the only people I can think of who deserve big bucks for what they have done. IMO
27 Heavymetal : Seiple, you'll make a great executive some day. You list background, experience and "connections" as important business acumen. Sorry, ace, but those
28 FDXmech : Of course. I never advocated an artificial inflation of the stock price, and in today's environment, one wouldn't occur. Anything that even smells fis
29 Seiple : Heavymetal, I caution you not to take statement as personal opinion. I may not agree with how things happen, but as I have said, this is the way stuff
30 Heavymetal : Seiple... Yes, you'll make a fine executive. You already have backpeddling down. Your posts are a veritble diatrabe on the nobility that comes with an
31 EssentialPowr : Hey Seiple, How would you feel about taking a pay cut in order to help pay the separation bonus earned by former CEO James Goodwin at United (it's in
32 Seiple : I give up. You won't change my views (even though most of them agree with you, as I've said) and I won't change yours. May all members of the upper ta
33 Flashmeister : May all members of the upper tax brackets burn in hell. There, I'm one of you. Hey, I'm in an upper tax bracket and I'm not burning... but that's beca
34 EssentialPowr : Gotta love the brand new, neophyte 22yr old MBA wanting to be the next Frank L...showing up for the hangar tour to learn what a 757 looks like. His pe
35 AA717driver : Lowestfareair--Unions exist because airline management would run pilots, mech's., F/A's and dispatchers 24/7/365 if they could. And the flying public
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