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Tugger
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Delta: Bonuses/Raises For Rank & File This Summer!

Thu Mar 08, 2007 1:59 pm

I am surprised I haven't seen a posting on this yet but it looks like Delta will be giving bonuses and possibly raises this summer to the rank and file. They state the exec's will get theirs after the rest of the employees but of course I will be curious to see what they get.

Fair use extract from the The Atlanta Journal-Constitution:
Employees will get pay raises this summer and a "significant stake" in company stock as part of broad-based compensation packages after the airline's expected emergence from bankruptcy this spring, CEO Gerald Grinstein said. ......"It will be the first time ever on so large a scale that a company emerging from bankruptcy has awarded stock to non-union employees," Grinstein said in a pamphlet sent to employees this week."
http://money.cnn.com/2007/03/07/news.../delta_pay/?postversion=2007030715

My question is how does (*or how long will) the stockholders allow Delta to "give away" 15% of the profits to someone else. I am not against the employees receiving what they deserve, I just know that modern corporate America tends to manage for short term share price gain and don't think this good will gesture will last.

Tug

[Edited 2007-03-08 06:29:52]
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Tugger
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Fri Mar 09, 2007 1:25 am

OK I'll reply to my own this once just to bring back onto the "front page" of the board. Perhaps I posted it too late for the Delta types!
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Tug
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panamair
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 8:33 pm

Here are more details about DL's rank-and-file employee compensation coming out of BK:

Main article: http://www.ajc.com/business/content/...ories/2007/03/19/0320bizdelta.html

Details: what employees will get: http://www.ajc.com/news/content/busi...s/2007/03/19/0320deltapayplan.html

Grinstein will not get any cash awards, stock, exit bonuses, etc....just his $338,000 salary.
 
Delta787
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 8:42 pm

This is good news for all Delta employees.
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Pope
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 8:53 pm

Quoting Tugger (Thread starter):
My question is how does (*or how long will) the stockholders allow Delta to "give away" 15% of the profits to someone else. I am not against the employees receiving what they deserve, I just know that modern corporate America tends to manage for short term share price gain and don't think this good will gesture will last.

I agree. But it shouldn't surprise anyone. Remember, these are the same people who labelled Delta "their Delta." Last time I checked a company is owned by its shareholders. Delta shareholders have lost their entire investment and the only ones people are feeling sorry for are the employees.

Quoting Delta787 (Reply 3):
This is good news for all Delta employees.

And bad news for its shareholders.
Hypocrisy. It's the new black for liberals.
 
lowrider
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 9:16 pm

Quoting Pope (Reply 4):
And bad news for its shareholders.

Only in the short term. Investing in your work force to motivate them can often have long term benefits, similar to dividend reinvestment. By giving some of the profits back to the employees, (who generated it in the first place), the management is clearly hoping to reap a larger profit in the future. Finally it apprears they have some leadership, not just management.
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 10:01 pm

Quoting Panamair (Reply 2):
Grinstein will not get any cash awards, stock, exit bonuses, etc....just his $338,000 salary.

Which says a lot about his leadership. Something that is lacking in corporate America these days. A more recent link to this was in USAToday this morning (03/20/2007) by Marilyn Adams: http://www.usatoday.com/travel/flights/2007-03-20-delta-pay-usat_N.htm
I can't help but think that when executive management gets greedy, that trait gets passed down to all employee classifications from pilots down to attendants and ground staff and technical personnel. It will be sad to see Jerry retire next August when he reportedly is scheduled himself to do so.
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exFATboy
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 10:02 pm

Quoting Pope (Reply 4):
And bad news for its shareholders.

Have to disagree - if the rank and file see a real commitment from DL management for profit-sharing in the future, it should reduce pressure for base wage increases, thus making it easier to weather the next downturn without the angst of givebacks, etc.

Quoting Pope (Reply 4):
Delta shareholders have lost their entire investment and the only ones people are feeling sorry for are the employees.

DL's shareholders lost their investment because of bad performance by prior management. I feel sorry for them too, but not to the same degree as the employees.

Quoting Tugger (Thread starter):
My question is how does (*or how long will) the stockholders allow Delta to "give away" 15% of the profits to someone else. I am not against the employees receiving what they deserve, I just know that modern corporate America tends to manage for short term share price gain and don't think this good will gesture will last.

If DL management incorporates a profit-sharing component into the overall compensation plan substituting (in whole or just in part) for base salary increases, thus making the compensation structure more flexible and able to withstand future downturns, I think stockholders will approve highly.
 
jetlanta
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Tue Mar 20, 2007 10:07 pm

This, coupled with Doug Parker's foolish end-around attempt, will do more for workforce morale than any company should ever dream of when coming out of this sort of a crisis.

If anyone is curious why Delta has stayed mostly non-union for its history...here is a textbook example. Though some mistakes were made post-9/11, on balance, this is how Delta has treated its employees for over 75 years.
 
OttoPylit
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 2:34 am

I remember that right after DL fought off US' hostile takeover attempt, so many Delta haters were touting that it would be interesting to see how much the DL execs give themselves once DL emerges from bankruptcy, and how Grinstien would give himself a multi-million dollar bonus.

As it turns out, according to the USA Today article today, "Give my bonus away," Grinstein will want any bonuses, stock, or stock options that he may be eligible to get, rumored to be around $10 million, to be given to the employees. He wants his bonuses to go to an employee scholarship and hardship assistance fund for Delta employees, and only wants execs to get anything AFTER DL's frontline people get theirs. His quotes from USA Today, "I'm leaving, so it doesn't fit me. Corporate pay packages have gotten out of control. It has become a salary derby out there." Delta execs will only get 2.4 % of stock over 3 years, compared to UA wanting 15% for their execs upon BK exit. DL employees will recieve 3.5% of stock and $130 million in cash.



Quoting Jetlanta (Reply 8):
This, coupled with Doug Parker's foolish end-around attempt, will do more for workforce morale than any company should ever dream of when coming out of this sort of a crisis.

If anyone is curious why Delta has stayed mostly non-union for its history...here is a textbook example. Though some mistakes were made post-9/11, on balance, this is how Delta has treated its employees for over 75 years.

Have to agree wholeheartedly! One heck of a way to exit bankruptcy, and one heck of an employee motivator!



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Evan767
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 2:50 am

Grinstein really is an amazing man. The Delta haters really should respect him even if they don't respect the airline and/or it's employees. He has done so much for the company and the employees will be sad to see him go, however many believe Whitehurst is just as good as Grinstein.
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worldtraveler
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 3:02 am

It’s not surprising that this topic is not near as popular as many others. You are either a DL employee and are having a very good day or you are an outsider looking in – and for the most part realizing you aren’t getting anything close to this at your company – airline or not.

I have said it time and time again and I’ll say it again. DL is a distinctly different company and has been for decades. DL’s current management is succeeding BECAUSE they realize like DL’s founder that you cannot expect to have a market-winning, profitable airline if you do not treat your employees well. It is a sad commentary of America that we think that it is ok for executives to get bonuses even if we think they are too large but then we say it is not necessary for front-line or rank and file employees to have them. It is the worker that built this country and the principle is the same for every country and for Delta. Companies like DL will succeed because they not only are fixing the morale problems that every employee of a bankrupt company must endure but DL also is changing the paradigm between how frontline and executives are compensated.

Note also that frontline employees will be able to sell their stock immediately and will get cash bonuses but executives will have to wait to get their compensation, it will all be in some form of stock, and the FRONTLINE EMPLOYEES HAVE TO BENEFIT BEFORE EXECUTIVES CAN GET THEIR BONUSES. That is unheard of in American business and will go a very long way to restoring DL management’s credibility with its employees.

Of course what DL is doing won’t likely be replicated too much in the US airline industry because this type of compensation would be negotiated away by unions at other airlines in return for something more certain. The result will be that DL will probably pay its employees more during the peak times and be able to adjust its business model when the downturns occur (And they will) but other airlines will be forced to endure high pay and restrictive work rules during the low periods and end up back in bankruptcy court to get out of those contracts. DL is clearly using its non-union status and its compensation strategies as a tool not only to help it succeed but also as something that its competitors simply cannot match.

Kudos to Delta and its employees for changing its compensation in such an earth-shattering way and for turning itself around more quickly and dramatically than has ever occurred before in the airline industry.
 
EvilForce
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 8:18 pm

I'm glad that Delta is remembering those that have sacrificed the most and gotten the airline back on track. While the average compensation for the managers will only be a $ 200,000 bonus, at least it's a start in getting their compensation back in line with other industries.

The top five officers will average $ 6 million each. Again, no where near what they should get, but at least it's a move in the right direction. Pretty impressive turnaround, and it's nice to see that a company still remembers to reward those employees and their families that sacrificed so much. Go Delta! Good job!

Delta Air's Top Officers to Get $29 Million in Shares (Update5)

March 20 (Bloomberg) -- Delta Air Lines Inc. will give its top five officers $29 million in new stock and options to keep them at the third-largest U.S. carrier when it exits bankruptcy.

Delta will spread $240 million in shares among 1,200 managers upon emerging from court protection in early May.

http://www.bloomberg.com/apps/news?p...20601103&sid=awSTOjU7Qkf8&refer=us
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FlyPNS1
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 8:32 pm

Quoting WorldTraveler (Reply 11):
You are either a DL employee and are having a very good day or you are an outsider looking in – and for the most part realizing you aren’t getting anything close to this at your company – airline or not.

Except for the fact that DL employees are some of the lowest paid in the industry right now.

Quoting WorldTraveler (Reply 11):
The result will be that DL will probably pay its employees more during the peak times and be able to adjust its business model when the downturns occur (And they will) but other airlines will be forced to endure high pay and restrictive work rules during the low periods and end up back in bankruptcy court to get out of those contracts.

DL's always had this power on account of it being mostly non-union. Unfortunately, as the last few years have proven, being non-union didn't prevent DL from filing for BK.

Quoting WorldTraveler (Reply 11):
It is the worker that built this country and the principle is the same for every country and for Delta.

It's funny you weren't saying this last year when DL was threatening liquidation because the pilots wouldn't take a 2nd round of cuts to subsidize DL management's incompetence.

Nonetheless, it is good to see DL providing some reward for all of their employee sacrifices. I would encourage the DL employees to enjoy it and be wise with their money.
 
Pope
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 9:40 pm

Quoting Lowrider (Reply 5):
Only in the short term. Investing in your work force to motivate them can often have long term benefits, similar to dividend reinvestment. By giving some of the profits back to the employees, (who generated it in the first place), the management is clearly hoping to reap a larger profit in the future. Finally it apprears they have some leadership, not just management.



Quoting ExFATboy (Reply 7):
Have to disagree - if the rank and file see a real commitment from DL management for profit-sharing in the future, it should reduce pressure for base wage increases, thus making it easier to weather the next downturn without the angst of givebacks, etc.

Those are circular arguments because when the company performs better, the employees feel that they deserve a bigger share of the profits. Just look at NW. UAL started the experiment with giving labor a share of the company, where did that get them?

Can you cite any objective data that support the contention that shareholder long-term return is improved by these sorts of programs?

Quoting ExFATboy (Reply 7):
DL's shareholders lost their investment because of bad performance by prior management. I feel sorry for them too, but not to the same degree as the employees.

Why should you feel any worse for employees than shareholders. If someone lost $10,000 in DL stock, how's that different than an employee having to take a $10,000 paycut? I would argue that the shareholder's loss is worse because once the shares are cancelled they're gone forever, where a worker can always work somewhere else the next year.

Companies belong to their owners not to their employees.
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Sean-SAN-
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 9:58 pm

Can someone estimate how much this will be in real $$$ for pilots/FA/ramp/CSA?
 
EvilForce
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 11:32 pm

Quoting Tugger (Thread starter):



Quoting Sean-SAN- (Reply 15):
Can someone estimate how much this will be in real $$$ for pilots/FA/ramp/CSA?

Pilots are covered under a contract. All non-contract employees will be spliting $ 480 million. Or appox. $ 12,000 per employee.

From the article: Delta's 39,000 non-contract employees will receive cash and shares valued at $480 million. The shares will have no restrictions and make up 3.5 percent of the carrier's total. Delta's 6,500 unionized pilots have their own contract and aren't affected by the plan.
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RDUDDJI
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Wed Mar 21, 2007 11:34 pm

Quoting Tugger (Thread starter):
"It will be the first time ever on so large a scale that a company emerging from bankruptcy has awarded stock to non-union employees," Grinstein said in a pamphlet sent to employees this week."

That's simply not true. UA did this when they emerged from bankruptcy. Grinstein's fact checkers should've done a better job...

However, overall, this is great news for DL emps. DL is lucky that much of their workforce is non-union, otherwise these things become a part of negotiations instead of a general offer of goodwill (or attempts at retention).
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lowrider
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Thu Mar 22, 2007 12:41 am

Quoting Pope (Reply 14):
Those are circular arguments because when the company performs better, the employees feel that they deserve a bigger share of the profits. Just look at NW. UAL started the experiment with giving labor a share of the company, where did that get them?

Can you cite any objective data that support the contention that shareholder long-term return is improved by these sorts of programs?

That question can come back to you as well. Can you cite data that shows employee performance remains constant in the absence of positive reinforcement?
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worldtraveler
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Thu Mar 22, 2007 12:58 am

Quoting FlyPNS1 (Reply 13):
Unfortunately, as the last few years have proven, being non-union didn't prevent DL from filing for BK.

because labor wasn't the real problem for DL. DL was forced into BK because they had not adapted to the LFC environment adequately and had a constantly changing network strategy.

Quoting Pope (Reply 14):
Why should you feel any worse for employees than shareholders

because shareholders aren't the only stakeholders in a company. Chapter 11 exists because there is more value than can be delivered to more people by RESTRUCTURING a company than would be seen if the company was liquidated. The stockholders lose either way. Creditors have more recovery under chapter 11 as do employees. Chapter 11 is the best possible outcome to a bad situation.

Quoting RDUDDJI (Reply 17):
UA did this when they emerged from bankruptcy.

No they didn't. UA is predominantly a unionized company. Their management/salaried employees got stock w/o being unionized but all of their major frontline groups are unionized and negotiated recovery as part of their contracts.

DL is predominantly a non-union airline and there is no major company that succeeded in giving as much to its non-union employees as DL has done.

stock ownership is well established as a means of improving ownership of the day to day decisions that make or break a company. the fact that UA and others failed despite having ownership doesn't mean the process is flawed. If anything, those companies failed because their union leaders wanted "guaranteed " income rather than the "at risk" money that comes from stock. the screwed up world of airlines is not the only place to look for evidence of successful employee stock ownership.

[Edited 2007-03-21 18:00:57]
 
RDUDDJI
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Thu Mar 22, 2007 7:31 am

Quoting WorldTraveler (Reply 19):
No they didn't. UA is predominantly a unionized company. Their management/salaried employees got stock w/o being unionized but all of their major frontline groups are unionized and negotiated recovery as part of their contracts.

DL is predominantly a non-union airline and there is no major company that succeeded in giving as much to its non-union employees as DL has done.

ALL UA employees got some of the stock. Union and Non-Union. Not everyone at UA is in a Union. And Delta has Unions too. True, their workforce is less unionized than UA but both have union and non-union employees. This quote was an attempt by Grinstein to grandstand, when in actuality he's really doing the same thing UA did.
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EvilForce
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Thu Mar 22, 2007 9:35 am

Quoting WorldTraveler (Reply 11):
I have said it time and time again and I’ll say it again. DL is a distinctly different company and has been for decades.

I bought a Venus Fly Trap today and was going to name it "Republican" but the fly trap is beneficial to the environment.
 
exFATboy
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RE: Delta: Bonuses/Raises For Rank & File This Summer!

Thu Mar 22, 2007 10:19 am

Quoting Pope (Reply 14):
Companies belong to their owners not to their employees.

Yep, and when shareholders allow ineffective management to remain in place, they get the return on their investment they deserve...zero. Shareholders have the ability to drive out bad management - employees geneally don't. One of the big problems with corporate governance we have in this country is that shareholders are far too passive.

In theory, I agree with you - a loss is a loss - but as a practical matter very few, if any, DL shareholders depended on those holdings to keep a roof over their heads and food on the table on a day-to-day basis. Most stock was held by institutional investors and mutual funds. Yes, some shareholders may have held DL stock as part of their retirement fund, and that loss could hurt, but airline stocks are very risky and I'd hope that such shareholders only had a small part of their overall portfolio in DL stock - or the stock of any airlline, for that matter, particularly if they are near retirement or have actually retired.