Delta cleared to nix shareholder bonus proposal

Delta Air Lines doesn't have to let shareholders vote on a proposal asking the company’s board to stop paying bonuses to executives unless it funds retired pilots’ pensions, the U.S. Securities and Exchange Commission staff said.

The agency is allowing Atlanta-based Delta to omit a retired pilot's shareholder proposal that the board prohibit cash or stock bonuses unless there is a process to fund retirement accounts for pilots who retired before Dec. 13, 2007. The retired pilot, Wendell Lewis, noted he is also a shareholder.

Atlanta-based Delta said it would block the proposal from going up for a shareholder vote, unless the SEC staff said otherwise.

The SEC's division of corporate finance said in a memo it would not recommend enforcement action to the commission if Delta omits the proposal from its proxy.

Delta had argued it can exclude the item in part because the proposal relates to the company's ordinary business operations. The SEC staff memo said there "appears to be some basis" for that view. The memo said that "although the proposal mentions executive compensation, the thrust and focus of the proposal is on the ordinary business matter of employee benefits."

Delta terminated its pilot pension plan while in bankruptcy about six years ago, reducing benefits for many retired pilots. That's because benefits from a terminated plan are insured only up to certain limits. Lewis is vice-chairman of the Delta Pilots Pension Preservation Organization, but he submitted the proposal independently.