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 The Brancatelli File

joe VOX POPULI
ON THE AXIS OF EXCESS


BY JOE BRANCATELLI

May 1, 2003 -- We need to move on from the distasteful and distressing issue of corporate governance and executive compensation at the Big Six carriers. But you sent me more than 2,500 irate E-mails about The Axis of Excess and an earlier piece on the specifics at Delta Air Lines. So it's clear to me that you need to vent on this topic just a little bit.

For the record, nine of the E-mails supported the compensation packages the Big Six executives awarded themselves. But all the others, which came almost equally from infuriated rank-and-file airline employees and outraged frequent flyers, were filled with colorful invective, agonized commentary and the righteous indignation that makes America great.

What follows are some of your best comments--well, the best ones without the curse words. None will convince the Mobility Moguls (a brilliant sobriquet I gleefully lifted from one of your E-mails) to reduce their obscenely high pay packets, but we can't expect miracles. We can only hope they go flying off into the sunset without doing any more financial or operational damage to the airlines they are pillaging.

THEY'VE GOT A FRIEND IN THE BUSINESS The senior management at these airlines has proven that there is no independent corporate governance through the boards of directors of their companies. It's a problem that permeates corporate America, where the so-called "independent" directors who serve on the compensation committees are senior executives getting similar deals from their compensation committees.

WELL, JOHN DASBURG WENT TO BURGER KING... It is truly amazing when, as Northwest recently did in its justification of management bonuses, the claim is made that the bonuses must be paid in order to retain top talent. Is this the same top talent that has failed to recognize changing market, political and global economic forces? Would any other industry want these people?

GENERAL FRANKS TO THE WHITE COURTESY PHONE We need "regime change" in the executive suites at the stinking, sinking six.

AND YOU WOULDN'T HAVE TO HIT THE CURVE When I was growing up, I thought that being a baseball player would be a good career: get paid millions of dollars per year and only have to be right (an average of) one time out of three. Little did I know how much extra work that idea entailed. I should have dreamt of being an airline executive.

CEOS IN OZ (THE HBO ONE...) I have an adjective for the facts you presented about upper airline management. How about "criminal?" In any civilized society, guaranteeing the top management's pensions while skating on other employee's retirement funds should land the criminals in jail!

TRUE, BUT THE SECRET HANDSHAKE IS COOL Not one penny should go to any airline that has not cut its top executives' salaries by at least the same percentage as it has cut the salary or pay of its employees. Not one penny to any airline that paid any executive a bonus of any kind. The "cult of the CEO" has destroyed many businesses in the past ten years and the cult's continuing arrogance and greed and false sense of entitlement will bring down all the famous names of the airline industry.

WE COULD VOTE FOR A CEO ALL-STAR TEAM, TOO Why are these top-level managers so disproportionately compensated for the jobs they appear to do? And in the end, if they fail to "make the desert bloom," they get to ride off into the sunset with a huge bag of dollars to live out a lavish retirement and maybe do some "consulting work." Corporate employees (not boards) should get to determine how much their top execs will be compensated. That would certainly make it interesting.

AND THIS SURPRISES YOU? When things go well, airline management pockets fortunes but share nothing with the workers. When things go badly, rank-and-file employees are expected to pay for their mistakes and greed.

I THINK THIS IS CALLED SOUTHWEST AIRLINES No more government bailouts for the airlines. Let them go bankrupt. New companies will spring up and fill the void. Maybe they will even be profitable if they aren't saddled with these ridiculous management compensation fees.

BUT THEY COULD TAKE AS MANY BAGS OF PEANUTS AS THEY CAN CARRY The top executives of any company that declares bankruptcy should be required to resign without bonuses, without severance packages, without retirement packages and without any other financial remuneration.

THE REQUISITE LORENZO REFERENCE If anyone was deluded enough to think this kind of pillaging in the airline industry went out with Frank Lorenzo, your article was proof that it is alive and flourishing even in the face of the worst losses in history! The magnitude of their greed is breathtaking!

THEY WERE ALL IN THE BATHROOM DURING THE VOTE I know Don Carty to be a man of strong intellect and character and it saddens me to see his career at American end on such a stupid note. But I think he was right to resign. What I don't understand is why we aren't seeing an apology from the American board for letting this happen. None of those insulting "retention bonuses" could have been put into place without board approval.

ACTUALLY, THEY ALL WENT TO PARTY SCHOOLS I really would like to see the college transcripts of all top executives of the airlines. Did any of these CEOs ever attend any ethics classes while they went to their Ivy League schools?

MR. CEACESCEAU TO THE WHITE COURTESY PHONE The top executives of the major airlines don't remind me of the Baghdad looters, but the leaders of the former Iron Curtain countries. Having reduced their countries to penury and preaching restraint and sacrifice to all, the dictators were found to have lived in the lap of luxury.

I HEAR MCDONALD'S IS HIRING, TOO I wonder where those execs would go if they weren't offered retention bonuses?

AND, IN CONCLUSION... Cheeky bastards, aren't they?

This column originally appeared at JoeSentMe.com

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.