Executive compensation is all the rage these days, but it is a problem that has been building for some time. Are the company leaders really worth what they collect?  Regardless, I remain a loyalist to Delta Air Lines, in spite of incredibly strong reasons to not be so.  At this writing, they’re in bankruptcy, and another air line wants to eat them up, but Gerald Grinstein is President of the Company and they may well survive. [Delta exited bankruptcy April 30, 2007]

     His predecessor was not a transportation executive, but a former utility executive, who brought to the job his only business knowledge, that of working in a heavily regulated, sole-provider-of-service environment. He and his cronies never “got” the transportation business, with the new executives brought into the Company bumping paying passengers out of first class so that they could ride home in comfort.  The Delta regulars, both passengers and employees alike, were seething. In one spectacular move, this tyro handed out massive “retention bonuses” to his chosen favorites in upper management. These people have since left the air line industry, wealthier at the expense of Delta.  In retrospect, it may have been better to have paid them to leave, much in the manner of the Marx Brothers: “How much do you charge to not practice [music]?” “Ahh, you couldn’t afford that.”

  In any case, as a stockholder, I was not thrilled:

Dear Mr. Mullin:

I saw my first passenger jet aircraft at the Houston airport in the early 1960’s.  It was a Delta Convair 880, and that was my introduction to the fact the Delta wasn’t like the other airlines at the airport. I’ve been through thick and thin with Delta; I nearly fell out of the sky on a Delta 747 when we hit a wind shear while leaving ORD. There’ve been a lot of good flights and a few bad ones, but the overriding sense has always been that Delta represented loyalty and honor. Respect toward their customers, mutual respect between management and the employees that make the Company work.  This is the Delta that uses No. 3 pencils instead of No. 2, because they last longer.  This is the airline that asks its employees to bend damaged paper clips back into shape so that they can be used again.

Of course, along the way, something changed. I like to blame Bob Crandall, but he is only the poster boy for a shameful mentality that has engulfed American enterprise.  I’m a capitalist and I’m a believer in the free market economy. But I’m also a believer in the old fashioned military mentality of taking care of your horse first, because without the horse, you can’t achieve your mission.  No matter how good you are. And, along the way, a corrupt mentality has emerged that rewards key employees to the exclusion of the front line employees, the ones who determine the ultimate success of your mission. The ones who are currently being asked to sacrifice for the benefit of the Company.

As you may have gathered by now, I’m not a big fan of your recent bonus awards to key employees.  As someone who pays quarterly taxes, I recognize that I am already being asked personally to support the airlines during their times of financial distress.  So it doesn’t make me feel better when I realize that I am probably also funding an incremental portion of those bonuses. I recognize the need for key employees, but I also expect the loyalty of those key employees during times of corporate distress.  And if these people are so disloyal that they need to be bribed to stay with the Company, then I suggest that you should explore the ranks of your current employees for replacements.  I’ve seen them out there; I talk with them at the check in counter and on the planes. There are plenty of Delta employees who are willing to work hard to make the Company succeed. And believe me, after what they’ve been through for the last decade, that’s saying something.

I acknowledge that these are times of financial hardships. I will be glad to open my stock portfolio and we can compare notes. But the recent awarding of bonuses to a small group of employees in this current environment is disgraceful.

Written March 29, 2003