You reap what you sow

Meet Glenn Tilton. 

Mr. Tilton is the CEO of the UAL corporation which operates United Airlines, Ted, and numerous other subsidiaries both in and out of the aviation industry. With a handsome compensation of $10.3 million per year, he ranks among the highest paid CEO's in the business. Tilton went to UAL in September 2002 in an effort by the board of directors to spring the airline from financial ruin. Shortly after he took office, the airline filed chapter 11 and Tilton made reductions in the employee payroll (remember subparagraph E of section 1113?), started TED, and made other changes that got the airline back out of bankruptcy in February 2006. As a bonus for "saving" the company, the board granted him over $39 million in stock options and other compensations. 

Now that you know a little of his background, have a look at this UAL press release from back in July of 2008:

United Takes Action to Protect Customers, Employees

July 30, 2008

United Seeks Injunction to Stop Unlawful Job Actions of ALPA and Certain Pilots

Chicago, July 30, 2008 - United Airlines today filed a lawsuit asking a federal court to stop the Air Line Pilots Association (ALPA) and certain pilots from continuing to engage in deliberate, organized and unlawful job actions that resulted in hundreds of flights being canceled and impacted thousands of customers and employees.

 The lawsuit seeks a preliminary injunction against ALPA and four named pilots for organized sick leave abuse in opposition to the company’s plan to reduce its fleet size and furlough pilots and to pressure United into renegotiating terms of a collective bargaining agreement that remains in effect through 2009. The lawsuit also seeks an end to a public campaign of intimidation that discourages pilots from picking up additional flying, effectively engaging in a slowdown.

 "It is absolutely irresponsible for ALPA to promote unlawful behavior, particularly in this environment, when the industry is taking unprecedented actions to offset record fuel costs," said Pete McDonald, executive vice president and chief administrative officer. "Our employees are working hard to make our company successful. We are going to ensure the integrity of our operation and will not allow the actions of ALPA and certain pilots to continue to harm our customers, our employees and our company."

 McDonald said the company pursued every other possible resolution—at significant financial cost—before pursuing litigation. These included increasing reserve pilot staffing and negotiating with ALPA to modify some of the work rules in the current agreement.

 United also noted that the rate of first officer sick leave in certain fleets is up 103 percent this summer. Further, driven by ALPA directives and intimidation, picking up additional flying, as is standard practice throughout the industry, has dropped precipitously compared to that of previous years. In 2006, pilots were five times more likely to fly additional trips compared to today.

 "The job actions have escalated, and the impact on our customers and employees is unacceptable, and must stop," McDonald said.

UAL would have the public believe that it is being victimized. How dare ALPA demand good pay for its pilots? How dare they do such an awful thing when the company is taking "unprecedented actions to offset record fuel costs," and "every other possible resolution" to "ensure the integrity of [their] operation." Here's the paradox: The same man who claims to be acting in the best interest of his employees is the one pushing for them to be laid off. 

Did the board even once consider reducing their own multi-million dollar paychecks before deciding to kick Joe F.O. and his family back onto the street to save $20 an hour by not having him on the payroll anymore? Go and ask any small business owner how much money he pays himself- and why so little, and he'll talk to you about re-investing profits back into the company and living within your means so that the company can grow to be healthy and strong. Airlines have lost sight of this principle. They handsomly reward the CEOs for doing a bad job, and fire the pilots even when they're doing a good job. 

ALPA responded today, and here's what they had to say-

United Pilots: Glenn Tilton’s Excessive Pay Package Must Go

Chicago, Ill., September 29, 2008 – Pilots for United Airlines (Nasdaq: UAUA) today demanded that the UAL Board of Directors cut the pay for its CEO, Glenn Tilton, as a reflection of concern and solidarity with passengers and employees who are being forced to tighten their belts.

At $10.3 million a year, Tilton’s compensation package—including salary, stock grants, options, and other added extras—is the highest in the airline industry. The CEO of American Airlines is paid $4.6 million a year, the CEO of Southwest Airlines makes $1.3 million, and the CEO of JetBlue gets $514,000. United’s pilots believe that there is no justifiable reason for the worst airline executive to be compensated the most. United Airlines has lost more money this year than nearly all other U.S. competitors combined.

“United Airlines is losing money, cutting back on service, and asking passengers to pay more for less,” said Captain Steve Wallach, Chairman of the United Chapter of the Air Line Pilots Association. “It’s time for the Board to tie Tilton’s pay to his performance.”

Captain Wallach said that Tilton’s level of compensation is another example of excessive pay to chief executive officers. “His pay is not an entitlement; he should have to earn his money, just like everyone else does,” said the union leader. Captain Wallach noted United’s stock price has fallen from over $50 a share to the current price of about $10 a share.

“It’s an insult to the loyal passengers and hard-working employees of United to see the CEO pull down this kind of money when the airline is facing such deep challenges,” added Captain Wallach. “This pay package must go.”

Tilton’s excessive pay package is only one of a series of bad decisions by the management of United, which orchestrated fat bonuses for its top executives when the company came out of bankruptcy two years ago. Tilton and his team of executives have continually looked after themselves, to the detriment of the rank-and-file employees of the airline.

“The pilots want to do everything possible to make United the airline that passengers choose first,” said Captain Wallach. “A commitment to responsible service and fairness is part of that.”

You reap what you sow, Glenn.