Shareholders of Delta Air Lines have approved a proposal to limit bankruptcy-proof executive pension accounts, which sparked outrage at the carrier last year.
The proposal was approved Friday at Delta’s shareholder meeting by holders of about 53 percent of shares, overcoming opposition by the board, according to the Wall Street Journal.
In a statement, the board said the measure would limit Delta’s ability to attract and retain top management talent, but the board will follow the shareholders’ wishes, said Delta’s Chief Executive Gerald Grinstein.
Under the plan, which has the support of the pilots union, shareholder approval would be required for any "extraordinary retirement benefits" given to top executives. That would include credit for years of service not worked, accelerated vesting rights, or funding bankruptcy-proof pension accounts.
Those benefits were given as "retention packages" to Leo Mullin, the former chief executive, and 34 other top officials despite the fact that employees’ benefits were cut back, some were laid off and the carrier’s financial position was weakening. The uproar that was created did not die down because Mullin and eight others who got the benefits, which were tied to staying at the company though the end of 2003, have now left Delta.
Delta is still struggling financial. The No. 3 U.S. carrier reported a loss of $383 million for the first quarter and is trying to cut costs. Grinstein said at the shareholder meeting in Atlanta that bankruptcy "can easily be avoided," but that deep wage cuts would be needed from the pilots to help Delta stay competitive.
John Malone, a Delta captain who heads the Air Line Pilot Association executive council, told the Journal that pilots are willing to invest in the airline. However, he said, "while cutting costs is appropriate in today's environment, simply slashing workers' pay and benefits is not a business plan by itself."