DELTA AIR LINES, INC. | Shareholder ratification of termination pay at DELTA AIR LINES, INC.

Status
59.60% votes in favour
AGM date
Previous AGM date
Proposal number
5
Resolution details
Company ticker
DAL:US
Lead filer
Individual
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Industrials
Company HQ country
United States
Resolved clause
Shareholders request that the Board seek shareholder approval of any senior manager’s new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus.

“Severance or termination payments” include cash, equity or other compensation that is paid out or vests due to a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits, or deferred compensation earned and vested prior to termination.

“Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not vested under a plan generally available to management employees; post-employment consulting fees or office expense; and equity awards if vesting is accelerated, or a performance condition waived, due to termination.
Supporting statement
The Board shall retain the option to seek shareholder approval after material terms are agreed upon. This proposal gives management maximum flexibility because it places no limit on termination pay. Elevated termination pay simply needs to be subject to a non binding shareholder vote. This proposal includes that under a heading such as the current heading of “Potential Post-Employment Benefits upon Termination or Change in Control” that a maximum dollar figure be disclosed for the top 5 Delta executives each year in the annual meeting proxy. Currently only a formula is included.

Generous performance-based pay can be okay but shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99 times base salary plus target bonus better aligns management pay with shareholder interests. For instance at one company, that does not have this policy, if the CEO is terminated he could receive $44 million in termination pay - over 10 times his base salary plus short-term bonus. The same person could receive a whopping $124 million in accelerated equity payouts in the event of a change in control, even if he remained employed. It is in the best interest of Delta shareholders and the morale of Delta employees, who do not get golden parachutes, to be protected from such lavish management termination packages for a few top Delta executives.

Proposals like this proposal received between 51% and 65% support at:
- AbbVie (ABBY)
- FedEx (FOX)
- Spirit AeroSystems (SPR)
- Alaska Air (ALK)
- Fiserv (FISV)

Proposals such as this, to improve the governance of Delta, are all the more important after a new Delta director, Leslie Hale, was rejected by 157 million against votes in 2022. 157 million votes against a Delta director may be an all-time record. Perhaps the head of the committee to recruit new directors, Francis Blake, needs to step down from the committee.

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Anima SgrForWhile the company's current severance arrangements are within market practice, the implementation of a policy like the one described in the proposal would meaningfully mitigate the risk of cash severance payments that are excessive or not in line with market norms.

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