PITbull
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- Dec 29, 2002
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Posted on Thu, Apr. 03, 2003
U.S. Airways Chief Derides Exec Pay Plan
MATTHEW BARAKAT
Associated Press
WASHINGTON - Executive compensation in the airline industry deserves
scrutiny, but a congressional proposal to freeze pay would merely reward
those who are already overpaid, US Airways president David Siegel said
Thursday.
In his remarks, Siegel singled out Leo F. Mullin - chief executive of US
Airways rival Delta Air Lines - as an executive whose pay package is
excessive.
Mullin received nearly $13 million in cash and stock options in 2002, at a
time when the company laid off more than 10,000 workers. Siegel, who joined
US Airways in March 2002, received $1.4 million. His stock options became
worthless whe n his company filed for bankruptcy.
Delta, the nation''s third-largest carrier, and US Airways, the
seventh-largest, are fierce competitors in the eastern United States. Siegel
in the past has claimed Delta has engaged in predatory business practices
and last year jokingly referred to Mullin as Dr. Evil.
The airline industry, which has struggled since the Sept. 11 attacks and
fared even worse since the war with Iraq, has been seeking congressional
aid. House and Senate committees have passed relief packages in the $3
billion range, but require freezing executives'' pay at 2002 levels as a
condition for the aid.
Siegel, asked about the issue at a speech to the American Bar Association''s
forum on aviation law, said freezing pay rewards those who have already
reaped excessive pay, and harms executives like himself, who took a 20
percent pay cut while the company went through bankruptcy.
There has to be a fair marketplace for management compensation. The only
thing more expensive than good management is bad management. But I think
there is appropriate scrutiny on some individuals. I won''t mention any
names, he said, pausing briefly before naming Mullin.
Mullin took a 10 percent pay cut to his $795,000 base salary, effective last
month. He also forfeit nearly $200,000 in salary in the final three months
of 2001 to emphasize his commitment to cutting costs, according to the
company''s proxy statement.
Delta spokeswoman Peggy Estes declined comment Thursday.
Siegel agreed last year to a 20 percent cut to his $750,000 base salary. The
pay cut will remain in effect for several years, although he is entitled to
bonuses and stock options.
But some airline employees, who collectively agreed to $1 billion a year in
pay and benefit cuts, were angry that management will receive an 8 percent
share in the reorganized airline and that $35 million in bonuses were paid
to three outgoing executives.
Siegel said the congressional aid is badly needed with airlines'' security
costs strangling this industry.
US Airways emerged from bankruptcy on Monday and received $1.24 billion in
financing to help implement its restructuring plan. That money means we can
weather this crisis better than most of the other airlines, Siegel said.
U.S. Airways Chief Derides Exec Pay Plan
MATTHEW BARAKAT
Associated Press
WASHINGTON - Executive compensation in the airline industry deserves
scrutiny, but a congressional proposal to freeze pay would merely reward
those who are already overpaid, US Airways president David Siegel said
Thursday.
In his remarks, Siegel singled out Leo F. Mullin - chief executive of US
Airways rival Delta Air Lines - as an executive whose pay package is
excessive.
Mullin received nearly $13 million in cash and stock options in 2002, at a
time when the company laid off more than 10,000 workers. Siegel, who joined
US Airways in March 2002, received $1.4 million. His stock options became
worthless whe n his company filed for bankruptcy.
Delta, the nation''s third-largest carrier, and US Airways, the
seventh-largest, are fierce competitors in the eastern United States. Siegel
in the past has claimed Delta has engaged in predatory business practices
and last year jokingly referred to Mullin as Dr. Evil.
The airline industry, which has struggled since the Sept. 11 attacks and
fared even worse since the war with Iraq, has been seeking congressional
aid. House and Senate committees have passed relief packages in the $3
billion range, but require freezing executives'' pay at 2002 levels as a
condition for the aid.
Siegel, asked about the issue at a speech to the American Bar Association''s
forum on aviation law, said freezing pay rewards those who have already
reaped excessive pay, and harms executives like himself, who took a 20
percent pay cut while the company went through bankruptcy.
There has to be a fair marketplace for management compensation. The only
thing more expensive than good management is bad management. But I think
there is appropriate scrutiny on some individuals. I won''t mention any
names, he said, pausing briefly before naming Mullin.
Mullin took a 10 percent pay cut to his $795,000 base salary, effective last
month. He also forfeit nearly $200,000 in salary in the final three months
of 2001 to emphasize his commitment to cutting costs, according to the
company''s proxy statement.
Delta spokeswoman Peggy Estes declined comment Thursday.
Siegel agreed last year to a 20 percent cut to his $750,000 base salary. The
pay cut will remain in effect for several years, although he is entitled to
bonuses and stock options.
But some airline employees, who collectively agreed to $1 billion a year in
pay and benefit cuts, were angry that management will receive an 8 percent
share in the reorganized airline and that $35 million in bonuses were paid
to three outgoing executives.
Siegel said the congressional aid is badly needed with airlines'' security
costs strangling this industry.
US Airways emerged from bankruptcy on Monday and received $1.24 billion in
financing to help implement its restructuring plan. That money means we can
weather this crisis better than most of the other airlines, Siegel said.
