Millions of Dollars in Executive Severances Are Back, Too

Old Sep 17, 05, 10:01 am
  #1  
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Millions of Dollars in Executive Severances Are Back, Too

I'm sure if I was one of those execs not being kept, I'd think it was only fair, and I inherently know as a deal guy that internally, they are simply treating it as a deal cost (and probably shaved the dough from another piece of the purchase), but it looks awful. Especially to rank and file employees, who have seen this paid time and again to people who wrecked the airline, and don't really think that deeply about it. The Judge OK'd it on Friday. Another case of the Arizona braintrust not paying attention to history. It's becoming painfully obvious they are making all these decisions based on the belief they are right, not on sound research. It reminds me of the Cingular/AT&T Wireless deal, where,after paying billions for the place, and its customers, it never contacted them. Callers were treated more like POW's than new acquisitions. When asked if you could just keep using your old AT&T stuff, they said sure, but you soon learned they would no longer support the equipment, or build additional sites for use on what is actually a different set of frequencies altogether. Deja vu all over again (early returns at Cingular showed big losses, over and above normal integration cost). Oh boy.
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Old Sep 17, 05, 11:13 am
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Several frequent posters on this website tried to file a brief against the bonus plan. We started the process too late, and in the end were unsuccessful in getting it filed in time.

I'm going to post what was to be the guts of the brief. To those employees who lurk here, I want you to know that several of your customers were willing to stand with you in this injustice and submit this on their own time and expense. For many of us, if not most of us, it hasn't been about points, miles or upgrades for a long time. You simply are the best.

After this post, I intend to do my best to but it behind me and move on. We lost the fight and now is the time to go forward and see what is on the horizon. I really don't want to talk about this management team any more. As my tag now says, I'm no longer a cockroach. I've moved on and doubt that I will be back.

Outiline from the brief...

The US Airways Executive Bonus Plan should be rejected and excluded from the Plan of Reorganization:

The very word bonus implies by definition that something extraordinary was accomplished! To date as customers we have seen reductions in cleanliness of aircraft, on time performance, and the loss of large number of high yield frequent flyers due to declining customer service and uncompetitive pricing policies.

The Department of Transportation (DOT) Statistics support the above contention that the current management team has not performed in a manner consistant with earning performance bonuses. In fact one could argue based solely on performance that the current executives owe the customers of US Airways a refund.

The most severe example of US Airways continued and ongoing failure to manage its affairs is what has been called the Christmas Meltdown by US Airways Chief Executive Officer Bruce Lakefield and others in the media. A 43 page DOT report details the events leading up to the incident and the companies response. 72,000 lost or delayed bags and their associated delivery and goodwill costs demonstrate the ineptness of the current management team.

It is our opinion that given the facts of the current situation US Airways Senior Management has not demonstrated to the flying public in general and to the petitioners in particular that their performance was exemplary and worthy of additional remuneration. Therefore we respectfully petition the court to reject the proposed bonus and retention plan.

Last edited by longing4piedmont; Sep 17, 05 at 11:18 am
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Old Sep 17, 05, 11:43 am
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us2
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It would be interesting to see a comparison of the amount paid out in bonuses with the amount saved in removing the power ports.
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Old Sep 17, 05, 1:12 pm
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Originally Posted by us2
It would be interesting to see a comparison of the amount paid out in bonuses with the amount saved in removing the power ports.
Given there are 111 Airbii (not counting the A330) is the old US fleet, I would estimate the savings are maybe $2-3 million max... in other words perhaps 2-3 times the pretzel savings and still a fraction of the bonus payout.
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Old Sep 17, 05, 1:45 pm
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The real issue is how it looks. As in the case of that poor SOB at FEMA last week, whether or not he was culpable, he had to go. Earlier, our new geniuses in Tempe made a decision on this guy Crellin. I have no idea who he is, but I do know the help doesn't like him. If you take any time at all to review the history of the airline, whether or not he is the smartest aviation guy in the world, you realize what kind of message retaining him sends, especially when he's the only one you keep. Ditto, the generic payment of large bonuses to second and third tier managers of a company in the throes of its second bankruptcy. I repeat, this one is starting to look like a replay of "Dumb and Dumber".
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Old Sep 17, 05, 10:48 pm
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Unfortunately, it seems to have become standard practice in just about every industry to reward executives with huge 7- and 8-figure bonuses. There seems to be a mindset at that level that, because we are such obviously superior people, we certainly deserve this largesse.

Plus, it tends to be kind of inbred at the upper echelons of businesses, and you might as well approve this guy's bonus, because next time it'll be you up for some nice chunk of change, and you wouldn't anyone to say NO now, would you?

It doesn't matter if the company goes well or tanks -- the common knowledge (hope?) is that there are these incredibly talented people (that you have to pay huge sums to) and that they will make your company a success. Study after study has shown that there is no relationship between pay and performance, but it doesn't matter -- see paragraph #2 above.

After all, these are "our kind of people" right?
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Old Sep 17, 05, 11:49 pm
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Originally Posted by deelmakur
The real issue is how it looks. As in the case of that poor SOB at FEMA last week, whether or not he was culpable, he had to go. Earlier, our new geniuses in Tempe made a decision on this guy Crellin. I have no idea who he is, but I do know the help doesn't like him. If you take any time at all to review the history of the airline, whether or not he is the smartest aviation guy in the world, you realize what kind of message retaining him sends, especially when he's the only one you keep. Ditto, the generic payment of large bonuses to second and third tier managers of a company in the throes of its second bankruptcy. I repeat, this one is starting to look like a replay of "Dumb and Dumber".
and, don't forget, Dumbest-- Mr Lakefield isn't even being severed, yet he's collecting $1.7 million in "severance". ah, the sheer greed... ought to be wonderful as they go to the labor groups for more "needed sacrifice" in the months ahead... I'm sure ALPA is waiting for him with knives sharpened..
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Old Sep 18, 05, 1:55 am
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Maybe the inbred executives can explain it away that way, but I expect better out of a federal judge.

Those executives were gone either way. There was no legitimate reason to give them a bonus on their way out.

Originally Posted by BigLar
Unfortunately, it seems to have become standard practice in just about every industry to reward executives with huge 7- and 8-figure bonuses. There seems to be a mindset at that level that, because we are such obviously superior people, we certainly deserve this largesse.

Plus, it tends to be kind of inbred at the upper echelons of businesses, and you might as well approve this guy's bonus, because next time it'll be you up for some nice chunk of change, and you wouldn't anyone to say NO now, would you?

It doesn't matter if the company goes well or tanks -- the common knowledge (hope?) is that there are these incredibly talented people (that you have to pay huge sums to) and that they will make your company a success. Study after study has shown that there is no relationship between pay and performance, but it doesn't matter -- see paragraph #2 above.

After all, these are "our kind of people" right?
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Old Sep 18, 05, 7:53 am
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Whether or not you agree whether the CCY crowd was actually 'managing' the place, exec/retention/stay-on bonuses were neccessary to keep people from jumping ship in the interim while the merger actually closed. If you were a mid-level manager or even professional staff (accountants, auditors, analysts, revenue management types) amongst others, why would you stay with the company until the end? Being a headhunter, I have first hand knowledge of the mass exodus of people leaving like rats fleeing a sinking ship (bonuses or not) over the last few months. The bottom line is that this company was/is a multi-billion dollar enterprise and someone has to run it.
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Old Sep 18, 05, 10:10 am
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Anyone who was employable (Lord knows,how?) jumped, rather than risk the deal going South, and no payday. Certainly the internal guys knew how "iffy" the thing was. Guys like Baldanza and Ashby who would have had the biggest checks, hit the rails early on. As for Lakefield, he really put the thing together. That 1.5 million should really be seen as an M&A fee, and I guarantee they would have paid a lot more to an outside firm (I know they also used other advisors, but he did the heavy lifting....I suspect the other characters primarily provided fairness opinions).
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