Northwest Airlines CEO Steenland will have 8 million reasons to go, come June
Written on April 2, 2008
MINNEAPOLIS — Northwest Airlines CEO Doug Steenland will have about eight million reasons to bail out of the struggling carrier this June.
His contract — signed the day Northwest entered bankruptcy more than two years ago — gives him an unusual one-month window to leave voluntarily and collect a special payment of at least $7.8 million. Steenland could get the same windfall if he leaves after a merger, but it’s far from certain the carrier’s talks with Delta Air Lines Inc. will lead to one.
Compensation experts said such lucrative escape clauses are an incentive to keep the CEO from leaving during the rough times. Others said CEOs whose companies go into bankruptcy shouldn’t get that kind of reward.
Without a merger, quitting outside the June window would bring Steenland only $558,164 cash till payday http://savingpaydayloans.com. Stock and options aimed at giving him a reason to stay are worth less than his June departure package because Northwest’s shares have lost two-thirds of their value since its bankruptcy exit.
A deal like Steenland’s is rare, but not unprecedented. Former US Airways CEO David N. Siegel exercised a similar clause in his employment agreement in 2004 to leave the company one year after it exited its first bankruptcy. He collected $4.7 million.
Northwest declined to comment on the payout or on Steenland’s plans.
Filed in: money.