WASHINGTON -- Sen. John McCain's original proposal was straightforward. With taxpayers bailing out the nation's airlines, he called on the federal government to prohibit pay increases for the industry's executives. Nobody should know better than McCain, however, that Congress tries to turn all legislation into pork. Sure enough, senior senators made certain that their pet airlines were exempted from the compensation restriction.
Indeed, lawmakers are so brazen that what they once dared only behind closed doors is now perpetrated over national television. On April 11, on C-SPAN, three powerful Senate appropriators exempted favored airlines from the restrictions. For all the bluster about cracking down on corporate greed, only 12 airline executives are affected by the one-year moratorium on higher pay. Many others enjoy massive increases in compensation that result in seven-figure salaries.The broader question is what in the world Congress is doing with any kind of wage controls at the executive level. With most U.S. airlines in desperate condition following the Sept. 11 terrorist attacks, carriers were trying to prevent a brain drain of valued executives departing for greener pastures. That is a subtlety politicians in Washington are ill equipped to handle.
McCain's ire was aroused late in March when it was revealed that Delta Air Lines CEO Leo Mullin, fighting hard for the new federal bailout, had his compensation boosted to $12.9 million at the same time as the company was losing $1.3 billion. The demand to cap executive pay was irresistible.
Since 70 airlines will share in the $2.3 billion of new federal aid (usually, but incorrectly, listed at $3.1 billion), the early presumption was that the McCain limitation would apply to all executives. But things don't work that way on Capitol Hill. The slicing down began at once. Purely domestic airlines were exempted by the House Appropriations Committee in what was interpreted as a friendly gesture toward Southwest Airlines and its influential CEO, Herbert D. Kelleher.
The nationally televised Senate-House conference of April 11 continued limiting the cap. Senate Democratic Whip Harry Reid of Nevada wondered whether America West could be exempted. America West CEO W. Douglas Parker's $550,000 basic income has swollen to $2,537,650 total compensation. (Reid was to be the honored guest April 17 at the opening of America West's new reservation center in Reno but did not appear for unexplained reasons.)