TrenchNews, Verse 12

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Changeover at Delta Airlines

We noted awhile back that Delta, under a charismatic CEO with the unlikely name of Gerald Grinstein, was the only airline around to treat its workers with respect, the only airline around to give its employees a large part of the credit for turning it around and bringing it out of bankruptcy, and the only airline around to reward its employees as well as its management. Well, Grinstein is retiring, and in his place Delta’s board has hired as its new CEO a guy named Richard Anderson who comes with a reputation for ruthless cost-cutting.

Incoming Delta Air Lines CEO Richard Anderson is a friendly and approachable leader whose easygoing manner often masks a shrewd and cunning lawyer’s mind, say Northwest Airlines workers and former associates of the one-time Texas prosecutor.

Anderson, 52, oversaw the heavily unionized Minnesota-based carrier from 2001 to 2004, a tumultuous period that pitted rank-and-file workers against management during a series of cost-cutting initiatives.

Despite his reputation, Northwest’s union chief suggests Delta’s workers could do worse.

Union leaders at Northwest give Anderson high marks for his “open-door” policy toward organized labor, but point out that he departed in 2004 before the worst of the bloodletting at the carrier, which was carried out by his successor, Doug Steenland.

“We had our issues with Richard, but overall we did OK with him,” said Ted Ludwig, president of Local 33 of the Aircraft Mechanics Fraternal Association.

“If we felt we had a concern we could not get resolved at the lower levels, he would always listen. He might not agree with us, but he would listen and seemed to empathize with you and he really seemed like he tried to put himself in your shoes.”

The last thing Delta needs right now is an anti-union, cost-cutting boss. Unlike American Airlines, Delta’s employees have been well-treated and well-rewarded for their efforts, and are perfectly aware that is was those efforts that were responsible for getting the airline out of a hole. They aren’t likely to take kindly to a CEO who wants to take it all away from them in the name of cutting costs after they’ve sacrificed so much. Just last week, the PBGC announced that Delta pilots’ pensions will be a little heftier than they thought.

The Pension Benefit Guaranty Corp., a quasi-government agency that insures workers’ traditional pensions up to certain limits, said it expects to cover a greater share of the pilots’ pension benefits because it also received more valuable stock and other assets than expected as part of Delta’s bankruptcy reorganization. The agency pays pensions above its guaranteed limits when it recovers enough assets to do so.The PBGC received a $225 million IOU and a $2.2 billion unsecured claim as part of a settlement for taking over Delta’s pension plan last year, which was underfunded by $3 billion at the time. Those claims were converted into Delta stock when the airline emerged from bankruptcy in April. The PBGC now has about 50 million Delta shares worth about $800 million, and expects to receive more as remaining disputes in the bankruptcy case are settled.

Many retirees will see a “significant increase in benefits” as a result of the additional money coming into the plan, Joan Weiss, chief valuation actuary for the PBGC, told about 120 Delta pilots and retirees Monday.

If Anderson screws around with that, he’s in trouble. So’s the airline. And he may have to. Why? Because he has negotiated a potentially humungous salary package with the Delta board.

Anderson’s base salary is just below his $612,307 base salary with Minnesota-based United HealthGroup in 2006, where he served as an executive vice president before accepting the Delta job. His total 2006 compensation at United HealthGroup was about $4.3 million, according to a database of U.S. executive compensation.

The Delta package would pay Anderson at least $900,000 a year — 150 percent of his base pay — in 2008 if he meets or exceeds key goals in Delta’s business plan. Meeting those goals would also trigger profit-sharing for other employees, said Delta spokeswoman Betsy Talton.

Anderson will get a “long-term incentive award” valued at an estimated $11 million in 2007. This would be awarded as 55 percent restricted stock, 25 percent in stock options and 20 percent in the form of performance shares. For 2008, Anderson will be eligible for long-term incentives valued at $4 million, according to the SEC filing.

(emphasis added)

At least his raise is tied to his performance – more than many CEO’s are saddled with – but even so, $15Mil in bonuses is considerably more than Grinstein got, and he’s the one who turned everything around. That money has to come from somewhere. Wouldn’t be that it turns out the employees pay for it, would it? It sure won’t be the investors.

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TrenchNews, Verse 11

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NYT: 7 Unions Ask NLRB to Go Back to Rule Allowing Unions to Bargain Without a Majority of Employees

Back in the 30’s when employers were fighting unions with private armies and using local police forces as strikebreakers, FDR’s National Labor Relations Board allowed – even encouraged and occasionally demanded – employers bargain with unions even though the unions did not yet represent a majority of the company’s workforce.

Today, the methods of intimidation used by employers to prevent unions from organizing employees are less violent and more sophisticated but just as immoral, and seven unions have together decided that it’s time The NLRB went back to the old rules – which are still in force.

Seven labor unions asked the National Labor Relations Board yesterday to order employers to bargain with unions, even when the unions represent only a minority of employees.

This would be a sharp departure from current practices, in which employers are required to bargain with a union only after it shows that a majority of employees at a workplace support it.

The unions hope that such a change will make it easier to unionize workers. Today, 7.4 percent of private-sector workers belong to unions, less than a fourth of the rate in the 1950s.

The unions involved in the bid, including the United Steelworkers and the United Auto Workers, say the labor board should return to a largely forgotten practice, prevalent in the 1930s, in which companies often bargained with unions representing only a minority of workers who had joined them.

“This is what the text of the National Labor Relations Act requires, and there are no decisions to the contrary,” said Charles J. Morris, an emeritus professor of labor law at Southern Methodist University and the foremost champion of this notion.

Union officials acknowledged that the labor board, currently dominated by appointees of President Bush, would probably not adopt a rule so favorable to unions. But union officials said they were petitioning now in the hope that there will be a Democratic president someday who will appoint a board that will look favorably upon their argument.

A pro-labor Labor Board – now there’s a radical idea.