Unlike Most Pay-Cutting CEOs, Delta's Won't Be Rewarded for Saving the Airline

Not only did he forgo part of a comparatively low salary while leading Delta through its Chapter 11 case, Grinstein will get none of the usual payouts. No stock. No cash bonus. Nada.


Grinstein has told the company to consider putting the extra compensation it would have given him into charitable funds for needy Delta workers and to provide scholarships for Delta employees, retirees and their families.

He says he plans to step down from the airline this summer. Grinstein has been on Delta's board since 1987, but his company pension will be based on a portion of his time as CEO, giving him just over $300 a month. He'll get some travel privileges on Delta jets, but no continuing health care benefits, an office or club memberships, according to Delta.

'Sign of good faith'

Observers say CEO pay cuts often are more about image than substance.

"Typically, when it is done it is cosmetic," said Charles Elson, who directs the University of Delaware's corporate governance center.

And corporate chiefs who get major pay after leading a company out of bankruptcy risk poisoning potential goodwill with workers, Elson said. But he said moves like Grinstein's resonate with employees. It's "an important sign of good faith."

Grinstein, a Seattle investment firm principal when he came off the board to succeed Mullin, is an unusual example in several respects.

By the time he took Delta's controls, he was already in the twilight of a lucrative career. He had amassed enough wealth to buy Bill Gates' old lakefront house in Seattle, tear it down and build one he and his wife liked better.

He'd been a partner in a prominent law firm; served as chief executive of Western Airlines before that carrier was acquired by Delta in 1987; and ran Burlington Northern railroad.

Some friends worried when he took the CEO post at Delta. The job didn't seem to come with much upside, other than that it was challenging. The airline was in a deepening financial crisis, and employee morale --- already hurt by pay and job cuts --- was further wounded by controversy over bonuses and bankruptcy-proof pension trusts targeted for Mullin and other top executives.

As an influential member of Delta's board, Grinstein had played a key role in Mullin's 1997 hiring and mentored him early on. He was on the board that approved the 2002 executive pay perks.

Friends wondered whether Grinstein's motive --- at least in part --- might be that he felt he owed it to Delta to help repair the company's problems.

Grinstein brushed that idea aside in a 2004 interview: "I must say I don't think of it that way."

---Staff writer Russell Grantham contributed to this article.

GRINSTEIN'S PAY HISTORY

Here's what Gerald Grinstein has taken --- or not taken --- during his tenure as Delta CEO.

* 2003: After being named as Leo Mullin's replacement, Grinstein announces he'll take a $500,000 salary --- lower than three out of the four executives reporting to him --- and skip bonuses, stock options or other add-ons.

* 2004: Grinstein cuts his salary in half, to $250,000. Delta announces 10 percent pay cuts for most employees starting in 2005; unionized pilots take deeper pay cuts.

* 2005: With his salary restored to $500,000 at the start of the year, Grinstein takes a 10 percent salary cut on Jan. 1 and another 25 percent after Delta files Chapter 11 in the fall, reducing it to its current level, $338,000. Other top executives' pay cuts are 10 percent and 15 percent. He and other Delta executives also skip retention bonuses and other perks often sought to keep management in place during bankruptcy.

* 2007: Grinstein refuses new stock, bonuses and salary raises after Delta emerges from Chapter 11, asking that any money he would have gotten be earmarked for charitable funds for needy Delta employees. Like other shareholders, Grinstein's old Delta stock becomes worthless once Delta emerges from Chapter 11.

CUTTING FROM THE TOP

A sampling of corporate leaders whose pay dropped:

* Brokerage czar Charles Schwab declined millions of dollars in bonuses in 2002, 2003 and 2004, saying he wanted to make the money available to other employees. He also relinquished stock options granted in 2000, 2001 and 2002.

* John Chambers, CEO of Cisco Systems, took $1 in salary for three years (2002-2004) but continued to gather grants for millions of stock options.

* Lee Iacocca took a $1 salary for a year, starting in 1979, while at Chrysler's helm. Still, he made tens of millions in pay over his career with the company.

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