Delta Air Lines is paying out thousands of dollars of bonuses to its managers, even though there is no profit-sharing payout for workers this year.
Atlanta-based Delta, which cut employees’ pay last year amid a steep decline in travel due to the COVID-19 pandemic, is giving managers, directors and and senior vice presidents one-time payouts ranging from thousands to hundreds of thousands of dollars.
The management bonuses also come as airlines get billions of dollars in federal stimulus funding and push for passage of American Rescue Plan legislation including billions more in airline aid.
Delta said in a written statement: “While all Delta people were affected by the worst year in our history, following a comprehensive pay review of all levels in our organization below the executive officer level, we identified levels that were disproportionately impacted as a result of last year’s events and made a one-time adjustment payment.”
Many managers and officers are paid significantly more than the airlines’ ground workers and flight attendants.
Delta last year cut employees’ hours and pay by 25%, along with manager pay cuts, and cut officers’ pay by 50% before restoring full pay this year.
The airline’s historic $12.4 billion loss for 2020 meant that employees also got no profit-sharing bonuses. A year ago the company paid out $1.6 billion in profit-sharing to employees, amounting to about two months of pay. Employees have gotten smaller “shared rewards” payments based on operational performance and travel passes.
The company says upper-level managers had bigger cuts in total compensation, since a greater share of their pay is at risk and dependent on the company’s performance.
Delta CEO Ed Bastian in a memo to employees Monday said those managers took “a much bigger cut, proportionally, to their compensation than the rest of the company,” while “their work hours grew to levels never seen as they rose to the challenge of addressing an unprecedented pandemic.”
He characterized the payment as a “one time adjustment,” rather than a bonus, to bring all employees other than executive officers to “the same year-over-year reduction range of approximately 20-30 percent.” Executive officers took a 50% cut in base pay last year, while Bastian’s salary was reduced to zero for last year.
The CARES Act funding for airlines included limits on executive compensation that applied to officers and others with total compensation above certain thresholds. Delta said it did not violate CARES Act provisions with the bonuses.
The View from the Wing blog by Gary Leff, which first reported the bonuses Sunday, said Delta is “voluntarily taking on additional payroll cost” as the federal government considers more airline payroll subsidies — though the Delta bonuses also suggest airlines “may be on the cusp of recovering.”
Separately, Delta said in a December filing with the U.S. Securities and Exchange Commission that its board of directors’ compensation committee had approved a new management incentive plan for “cash incentive award opportunities beginning Jan. 1, 2021.”
It says the plan “provides that there is no payout to employees under Delta’s broad-based profit sharing program for a plan year, any payout earned under the Plan by most management participants, including participants employed by Delta as executive vice presidents or more senior officers, will not exceed the target award level and, for those executive officer participants, the payout will not be paid in cash, but in shares of restricted stock.”
Delta said that plan does not apply to the current management bonuses.