Excerpt from 1113© hearing 1/19/06 – union vs. management paycuts
Questions by PFAA lawyer Seeham, answers by company rep. David Davis
Q Okay. So Northwest’s initial proposal was, in effect, for a thirty-percent head count reduction?
A I believe it was in—I believe it was in that ballpark.
Q Okay. And if you look under base salary and incentive reductions, do you know what percentage base salary reduction is reflected in this figure for management employees?
A Yes. There’s a five percent permanent officer head count—I’m sorry—a base salary reduction, as well as reductions in our incentive compensation. I believe there’s a cap on the amount of incentive compensation that can be paid out. I don’t remember the exact cap off the top of my head.
Q So a five percent base salary reduction?
A Right.
Q And what is the base salary reduction that’s being sought from the flight attendants?
A I believe it is in excess of twenty percent. I don’t remember the precise number.
Q And that—you believe that salary reduction is likely to go up significantly if the flight attendants try to reduce the outsourcing to foreign flight attendants from seventy- five percent to thirty percent?
A Yes. In order to hit the 195 target, there might be other places to realize those savings, but that would be one potential place.
Q How are management personnel at LCCs compensated in comparison to Northwest management employees?
A My guess would be base salaries lower and stock compensation significantly higher.
Q Base salary is lower. How much lower?
A I don’t know. I haven’t seen the comparison of management salaries across Northwest and the LCCs.
Q You’re not aware of any—are you aware of anybody - was charged with making such a comparison?
A I would assume that our human resources department benchmarks our management costs against other airlines, as well as other companies in the Minneapolis area, where we compete for management employees.
Q Okay. But in answer to my question, you don’t know anyone who has made this comparison in terms of percentage differences by way of convincing the different employee - unionized employee groups that management is taking their fair share of the hit?
A Not that I know of. I’m not sure where the data would come from.
Q Do you consider the successful LCCs to have competent managerial staff?
A Yes, I do.
Questions by PFAA lawyer Seeham, answers by company rep. David Davis
Q Okay. So Northwest’s initial proposal was, in effect, for a thirty-percent head count reduction?
A I believe it was in—I believe it was in that ballpark.
Q Okay. And if you look under base salary and incentive reductions, do you know what percentage base salary reduction is reflected in this figure for management employees?
A Yes. There’s a five percent permanent officer head count—I’m sorry—a base salary reduction, as well as reductions in our incentive compensation. I believe there’s a cap on the amount of incentive compensation that can be paid out. I don’t remember the exact cap off the top of my head.
Q So a five percent base salary reduction?
A Right.
Q And what is the base salary reduction that’s being sought from the flight attendants?
A I believe it is in excess of twenty percent. I don’t remember the precise number.
Q And that—you believe that salary reduction is likely to go up significantly if the flight attendants try to reduce the outsourcing to foreign flight attendants from seventy- five percent to thirty percent?
A Yes. In order to hit the 195 target, there might be other places to realize those savings, but that would be one potential place.
Q How are management personnel at LCCs compensated in comparison to Northwest management employees?
A My guess would be base salaries lower and stock compensation significantly higher.
Q Base salary is lower. How much lower?
A I don’t know. I haven’t seen the comparison of management salaries across Northwest and the LCCs.
Q You’re not aware of any—are you aware of anybody - was charged with making such a comparison?
A I would assume that our human resources department benchmarks our management costs against other airlines, as well as other companies in the Minneapolis area, where we compete for management employees.
Q Okay. But in answer to my question, you don’t know anyone who has made this comparison in terms of percentage differences by way of convincing the different employee - unionized employee groups that management is taking their fair share of the hit?
A Not that I know of. I’m not sure where the data would come from.
Q Do you consider the successful LCCs to have competent managerial staff?
A Yes, I do.
