Delta Air Lines has announced a compensation plan for executives and employees that greatly limits how much top management will earn as the embattled airline emerges from Chapter 11 bankruptcy protection.

Chief executive officer Gerald Grinstein will continue to collect his current base salary of $338,000, according to The Wall Street Journal, but he will not receive equity awards, cash incentive payments, or severance. For other officers, equity awards will comprise 55 percent restricted stock, vesting in three tranches over 30 months following Delta’s emergence from bankruptcy, and 45 percent stock options and performance shares, earned over the three years following emergence.

Officers and directors will not receive across-the-board pay increases until frontline employees are earning industry-standard pay, Delta affirmed. And unlike the rank and file, they will not receive cash lump-sum payments when the airline emerges from bankruptcy.

Eligible employees will receive cash payments totaling about $130 million after the airline’s emergence from Chapter 11, planned for early May. In addition, Delta will distribute to its approximately 39,000 noncontract employees 3.5 percent of the airline’s outstanding common stock, with an estimated initial value of about $350 million.

Executives will participate in the same retirement benefit plan as other non-contract employees; they also will be eligible to participate in an annual incentive plan. For senior officers, performance measurement will be based on a combination of financial and operational goals, and no payments will be made for any year for which there is not a payout under the broad-based profit-sharing plan, the company added.

Even so, the Journal pointed out that chief financial officer Ed Bastian and chief operating officer Jim Whitehurst will receive an estimated $8.4 million in restricted stock, stock options, and other performance-based shares if Delta hits its 2007 financial targets.

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