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.
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.