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Airline Shareholders Rebel Against Execs
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By Chelsea Emery and Jonathan Stempel

NEW YORK (Reuters) - Shareholders on Friday lambasted Delta Air Lines Inc. (NYSE:DAL - news) and Northwest Airlines Corp. (Nasdaq:NWAC - news) executives for greed and mismanagement at the carriers' annual meetings, with Delta shareholders approving accounting and severance proposals opposed by the carrier.

Airlines have been under pressure from unions and Congress for the last month, as they post hefty losses and cut jobs, yet reward top management with compensation packages reaching into eight figures.

Investors and Delta employees packing the Plaza Hotel ballroom in New York erupted into cheers when the No. 3 U.S. carrier said two pilot-sponsored resolutions passed.

A mile away at Northwest's meeting in the Equitable Life Building, flight attendants for the No. 4 carrier Northwest demanded, unsuccessfully for now, that management rescind bonuses and pare or eliminate stock option awards.

"What this dialogue today was about was, are we really all in this together, or once again are we expected to take cuts while making executives very rich," said Mollie Reiley, an official of Teamsters union Local 2000, which represents Northwest's attendants. "No one's interested in doing that, quite frankly. Our members would rather go into bankruptcy."

Delta, which is based in Atlanta, and Eagan, Minnesota-based Northwest have struggled to stay afloat as war, terrorism fears, security hassles and the sometimes deadly severe acute respiratory syndrome (SARS (news - web sites)) virus crimp travel.

A slew of carriers have already sought bankruptcy protection, including UAL Corp.'s (OTC BB:UALAQ.OB - news) United Airlines Inc. and US Airways Group Inc. (OTC BB:USALA.OB - news). US Airways emerged last month.


Leo Mullin, Delta's chief executive, opened his prepared remarks with a comment on his compensation, which totaled at least $13 million in 2002 and was criticized by Sen. John McCain of Arizona, among others.

"I offer my sincere apologies, especially to employees," Mullin said. On April 3 Mullin said he will refuse about $9.1 million of potential payments in 2003 and beyond.

At both meetings, management strove to calm fears and possibly set the stage for more cost cuts.

"I'm not going to sit here and say we're going to file for bankruptcy," said Northwest Chairman Gary Wilson. He added, however: "If we're not cost-competitive, we can't survive."

Delta's Mullin echoed this view. "Success is anything but ensured," he said. "Tremendous challenges must be met."

Employees and shareholders, however, demanded management share in their respective pain. Delta shares closed Friday at $11.97, down 32 cents, while Northwest shares fell 33 cents to close at $7.16. Over the last year Delta shares have fallen 58 percent and Northwest's 63 percent.

"You should be ashamed of yourselves," a Delta shareholder yelled into a microphone. "I paid for (my shares) and you've paid me nothing."


One of the Delta pilots' successful resolutions asked the carrier's board to seek shareholder approval for some executive severance packages.

"I'm ecstatic," said Michael Messmore, who introduced the proposal, which had failed for three straight years.

The other resolution asked that Delta recognize the cost of stock options as an expense.

Northwest shareholders however rejected a proposal to force management to seek shareholder approval for any anti-takeover "poison pill," such as share issuance that might cause the value of existing shareholders' stakes to fall. The proposal received a preliminary 44 percent of the vote.

Airline employees were split on whether they would accept new salary cuts to keep their carriers out of bankruptcy.

"I'm willing to take a cut, but I'm afraid management will just start plucking hair," said a Delta pilot, who asked not to be named.

Some Northwest flight attendants were less amenable.

"We're all working short crew, we're working longer days, and he all wants us to do it for less money," said Josh Zivick, 32, who has for five years worked for Northwest. "It's not going to happen."