Friday, April 18, 2003

Mi pension no es su pension One day after all major airline unions ratified $1.62 billion worth of pay cuts and benefit concessions, workers discovered that "management failed to disclose a protected pension fund and bonuses set up only for top executives," according to the Dallas Morning News. Ooops. Now the pilots and flight attendants are pissed and the Transport Workers Union is threatening to refuse to sign the new contract membership ratified. Flight attendant union President John Ward called it ...a scheme to line the pockets of a few top executives in the event the company files for bankruptcy. Of course, AMR and management consultants consider this hyperbole and think the executive pension plan is imminently fair. According to Phil Roberts of airline consultant UnisysR2A: You have to provide a certain level of compensation for you senior management or they're going to leave the company... American's already lost a lot of executives and they have to be able to do something to keep them. This is an oft heard justification for outrageous compendation packages; corporations must pay what their competitors do in order to attract and retain "top talent". One wonders how difficult it would be to attract new, though thoroughly inexperienced, executives. How much worse can they do than the incumbents? I reiterate my standing offer to take the CEO position of any company, without a severance package or stock option, and run it for one year for the fee of $1 million. Flat rate. No vesting, no pension. So I run the company into bankruptcy. How much worse is that than what you're facing now? UPDATE AMR CEO Donald Carty announced late Friday afternoon the company would cancel their controversial executive pension plan, especially after a threat by the Transportation Workers Union to refuse to sign their ratified contract. Carty "apologized to union leaders over how the carrier revealed the bonus plans." While we applaud AMR's management making the right decision, let's be clear about this: AMR backed down not because they felt bad about how the pension details were revealed, but because they were revealed at all. More important, they backed down because a major union had the power to negate the entire deal and force the company into bankruptcy. Had all the union contracts been signed before the pension plans leaked out, you can bet AMR wouldn't be making such a concession. 5:40:40 PM    Oh yeah? []