http://www.kansascity.com/mld/kansascity/business/6894212.htm
Posted on Tue, Sep. 30, 2003
Worldspan execs paid millions in bonuses amid layoffs following sale
LOUISE CHU
Associated Press
ATLANTA - Travel reservation service Worldspan gave top managers
millions in bonuses to stay on board during the company's sale, while
hundreds of other employees were laid off and took pay cuts, filings
with the Securities and Exchange Commission show.
The Atlanta-based company spent about $17.3 million in
"change-in-control" expenses in the last fiscal year on an undisclosed
number of executives, in addition to paying its five top managers more
than $5 million in retention bonuses, according to SEC reports filed
Sept. 24.
The payments came at a time when the company had laid off 330 workers
and asked remaining employees to take a 5 percent pay cut.
In June, Worldspan was sold by Delta Air Lines, American Airlines and
Northwest Airlines to Travel Transaction Processing Corp., a new
company formed by Citigroup Venture Capital Equity Partners L.P. and
Toronto-based Teachers' Merchant Bank. The airlines received $745
million in cash and more than $200 million in notes and credits toward
future services in the deal.
Paul Blackney, the company's former president who stepped down after
the buyout, received $1.65 million of the 2002 bonus money. His annual
salary was $401,603.
Besides Blackney, Douglas Abramson, senior vice president and general
counsel, received $1.02 million of the 2002 bonus money; Sue Powers,
senior vice president of worldwide product solutions, received
$933,099 in bonuses; Dale Messick, senior vice president and chief
financial officer, received $784,806 and Michael Parks, senior vice
president of worldwide travel distribution, received $634,338.
In anticipation of the company buyout, the executives had agreed to
defer receipt of their 2002 bonuses until September 2003 in exchange
for 5 percent interest on the nine-month delay.
The SEC filings were disclosed the same day Worldspan announced that
the 5 percent pay cut for other employees would remain in place.
"Because of our financial position, we have reached the difficult
conclusion to continue indefinitely the 5 percent salary reductions,"
Abramson wrote in a company memo obtained by The Atlanta
Journal-Constitution reported.
Abramson said Worldspan was about $20 million below its projected
profit for 2003.
Worldspan officials were not immediately available for comment
Wednesday.
In the second quarter, the company reported $233.1 million in revenue
- a 1.3 percent decrease from $236.1 million in the year-ago quarter.
Company officials cited the war in Iraq and the SARS outbreak for
decreases in air travel booking volume.
The company had $105 million in profits in 2002 on revenue of $915
million, but net income fell 60 percent to $30 million in the first
half of this year compared to a year ago - in part because of the
executive bonuses.
Besides selling its services to various airlines and travel agencies,
Worldspan handles ticketing for online companies, including
Priceline.com and Expedia. It has 3,200 employees.
ON THE NET
http://www.worldspan.com
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