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Alaska Airlines Settles Pay for Pilots, Execs

The union for Alaska Airlines' pilots has approved a contract that restores much of the pay cuts imposed on them in 2005, thus ending a long and often-contentious bargaining process.

Separately, shareholders of the airline's parent company have approved the pay structure for senior executives in one of corporate America's early "say on pay" votes.

First, the pilots: After nearly 18 months of contract talks, the union has approved a new four-year contract. The new deal grants raises to pilots of 11.8 percent in the first year of the contract; first officers will see raises between 16.4 and 29.5 percent.

Right now, pilots at the top of the scale make at least $11,550 a month, according to Airline Pilot Central. First officers at the top make at least $7,275.

The union said its 1,455 pilots also won better work rules, and got the right to participate in a performance incentive program that previously was only offered to non-union employees. However, it agreed that future hires into the union will get a 401(k) retirement plan instead of the defined benefit pension that current members have.

Alaska's recent labor history has been rocky: In 2004, it was unable to reach a deal with the Air Line Pilots Association on a contract, despite 16 months of talks. The two sides agreed to go to arbitration, and the arbitrator decided to cut pilot pay, as reflected in the 2005 contract.

In 2005 the airline also fired its union baggage handlers, and outsourced the work to a non-union company. Last year, another arbitrator ruled that move violated Alaska's contract with the union, and ordered the two sides to resume negotiations toward a deal to bring the union handlers back. Those talks went nowhere, and the two sides are now back in arbitration.

Now, executive pay: Alaska Air Group shareholders have approved compensation plans for the top five executives with a 96-percent yes vote, the company announced this morning.

Alaska is part of the first wave of U.S. companies to grant shareholders a say on pay. According to one report, more than 100 companies have put non-binding pay resolutions before shareholders this spring, spurred on, no doubt, by proposals in Congress to require the votes, at least for companies accepting federal bailouts.
According to Alaska's most-recent proxy statement, CEO Bill Ayer's pay package totaled $2.02 million last year. Most of that was from stock and option awards; the company says his base salary of $360,000 is among the lowest compared to CEOs at other U.S. airlines. Ayer's total pay was up about 3 percent, compared to his 2007 take-home.

Recently retired executive vice president Gregg Saretsky cashed in $788,000 in options before leaving Alaska at the end of 2008. That pushed his total compensation to $1.7 million -- roughly double his 2007 pay -- and made him the company's second-best paid executive last year.