Skip to comments.Message from United's Management: Let Them Eat Cake
Posted on 12/27/2005 9:03:05 AM PST by Old_Mil
Message From United Management: Let Them Eat Cake Now That Your Pension's Gone...
United Airlines senior management just announced another part of its grand Chapter-11 exit plan. It seems that when the company emerges, 400 select members of United Airlines' executive and senior management team will be awarded 15% ownership of the carrier, worth a tidy $285 million - or more.
From The Marie Antoinette School of Management... Nice compensation. Royalty does have its privileges and perks, you know.
And, why not? Now that United's employee rank-and-file saved their airline via double-digit pay and benefit cuts, not to mention having their pensions trashed, United's management, naturally, sees fit to reward itself, with a stock deal that will almost certainly make at least some of them - if not all of them - a whole lot richer.
Forget the fact this this is the same wonderful team of brilliant thinkers who have made United a million-dollar playground for who-knows how many lawyers and other outside "advisors" who dreamed up vapor-brained and vapor-results ideas like Ted. Or, how 'bout the deal early on, according to news reports, where this same management team had to pay some outside company $1 million a month to tell them how to re-structure the United Expressmarx1.JPG (24989 bytes) system. Funny, if this management team is worth the better part of a third of a billion bucks in exit-rewards, how come they couldn't figure stuff like this out for themselves? It's probably yet another indication of just how hands-on this UA senior management team must be.
Meanwhile, Out In The Provinces... But while United's senior leaders are probably planning how to use this eventual wonderful windfall - maybe a nice condo on Longboat Key, or a college fund for the kids, or maybe just a new Porsche Cayenne Turbo-S, the scene among the rank-and-file might be a little bit different.
How's this for starters - as a direct result of the cuts they gave to save their company, some current and retired employees are finding it necessary to materially cut back in their own lifestyles. Some are actually selling their homes because that pension they worked so hard for is now essentially a bargain-basement monthly check from the PBGC. With pay cuts of 25% or more, Christmas this year was no doubt tough on a lot of United families.
But not, apparently, on the key leaders at United - some of whom were the very people in charge when the airline sank into bankruptcy in the first place. There is nothing wrong with valid management compensation. But under these circumstances, a "reward" that averages something like $710,000 per executive has a real nasty odor to it.
Sure, there's two comebacks to this. One that it's to "keep good talent in place," which is an argument that they'd probably best not bring up. The second is that, hey, it's not cash, just stock - probably stock they can't sell for a couple of years. Right - so these guys can depend on the rank-and-file to work hard at their new, lower salaries to make sure the value of the shares goes up even more.
It all has a nasty resemblance to the stuff a nineteenth century crackpot named Marx used to babble about.
If all the employees left, there wouldn't be much of a company left. Of course, the sheeple won't do that, but the great thing about this country is that no one FORCES you to put up with this.
If they run United into the ground they get nothing.
It's all just another variation of "steal from the employer".
CEOs are employees, too, afterall.
The unions got their turn, now management is taking "it's share".
"It all has a nasty resemblance to the stuff a nineteenth century crackpot named Marx used to babble about."
This screed was written by one of that crackpot's most devoted followers.
I knew United was eventually going down after the "Summer of hell", in which airline employees intentionally sabotaged their own company. As part of "negotations", stewardesses conspired to not show up in just such a way as to maximize harm to their company -- resulting in many cancelled flights at the last minute, with the company least prepared to deal with it and many enraged customers. Plus United's pilots made drastically more than their competitors before this bankruptcy result. I have no doubt the bankruptcy isn't being handled well, but the situation was brought about in the first place largely by employees themselves.
Don't forget that management are employees, too.
**If all the employees left, there wouldn't be much of a company left.**
We tell my brother-in-law this all the time. He works for UPS and all he does is complain about management. One day - during a tirade - I looked at him and said, "If it's such a horrible place to work then quit and go to FedEx"! He looked at me like I was crazy.
"But they don't pay as good and I would lose my 8,000 vacation weeks a year (my sarcasm as he's always on vacation), etc. etc."
My reply, "Then quit bitchin' about it". Heavy Sigh!!!
Do we have any indication if this was a policy before declaring bankruptcy and if so what was the compensation then?
Ha! Ha! All it really does is ensure that the morons who drove the company into the ground in the first place will have a lock on the board of directors so they can never be gotten rid of. I'm sure they will design some beautiful golden parachutes once their slash-and-dash strategy has hollowed out the company at the working level.
Plus, for all the pay and bennies, does your bro-in-law's job require anything more than a pulse? Ask him if he could manage, much less create, UPS.
Essentially, this is just a variation on the theme of what American Airlines tried to do after obtaining concessions from its unions that ended up costing the CEO his job...this time it's executed with stock options and under the auspices of a bankruptcy judge.
I'm glad to see all our freemarketeers - with the exception of our one animal farm poster who seems to get it - chime in with such utter disregard for shareholder's wellbeing.
"...does your bro-in-law's job require anything more than a pulse?"
And it goes downhill from there.
Wonder why unions came into existance? Or why there is an NLRB?
I know two UPS employees. One retired early, to a decent retirement due to health problems brought on by the job. The other is a very stressed out individual, but realizes he has a good job. From what I understand, working for UPS is stressful and physically demanding.
But, we shall give no respect to someone who works FOR someone. Nor shall we acknowledge that there is value in anything other than management! Workers are to be used, and thrown out, just like a desk or chair. If they don't like it, they should do better!
Unions aren't the only ones with screwed up priorities.
You've never created a company, have you?
"You've never created a company, have you?"
Arrogance is quite unbecoming, especially when coupled with lack of thought.
The short answer is no, I have never created anything other than my own one person consultation company.
The more insightful question would be do I understand the concepts? If one has to do something to truely appreciate it, then most teachers should be fired, we should stop having concerts and sporting events. For anyone who hasn't played professionally, can't appreciate it.
Fortunately, I took an economic path that worked for me, and I am doubly thankful it's not working for you.
What you describe is exactly what motivated the likes of Ken Lay, Bernie Ebbers and Jack Grubman.
Better that executive bonuses be paid in cash, not stock, and that cash be pegged to verifiable performance benchmarks.
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