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Delta Air Lines Annual Report (Amendment), Year Ended Dec 31, 2005

Filing Date
Filed April 28, 2006
Period End
December 31, 2005
Security
DAL
In the record · 2016–202610-K1210-Q338-K210

DAL filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 210 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Oct ’17Oct ’17
  2. Material agreement8-K · Oct ’19Oct ’19
  3. Material agreement8-K · Nov ’21Nov ’21
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K/A filed April 28, 2006. Cited figures are marked; the original filing is the authoritative source.

This Form 10-K Part III amendment-style filing from Delta Air Lines, Inc. (filed April 28, 2006) supplies the governance, executive compensation, beneficial ownership, and auditor fee disclosures that Items 10 through 14 call for.

It does not contain financial statements. The filing is set against Delta's Chapter 11 reorganization, which began September 14, 2005. Gerald Grinstein serves as Chief Executive Officer and John F.

Smith, Jr. as non-executive Chairman. Executive salaries were cut 15% for most officers and 25% for Mr. Grinstein effective November 1, 2005, and the company seeks an additional $3 billiona in annual financial benefits by the end of 2007. The filing states that all stock options, stock appreciation rights, and other equity awards were rejected effective March 31, 2006, with Bankruptcy Court approval, so existing equity compensation has no value.

The Bankruptcy Court also approved a new Director and Officer Severance Plan on February 22, 2006, with severance of 12 months' base salary for Executive Vice Presidents, nine months for Vice Presidents and Senior Vice Presidents, and six months for Directors. Pre-petition non-qualified nonpilot retirement benefits have ceased, and nonpilots would hold unsecured claims in the bankruptcy. Directors and executive officers as a group beneficially owned 122,613 shares, less than 1%b of common stock.

Auditor fees were $4,188,500c in audit fees for 2005, down from $4,748,203 in 2004, and tax fees fell from $2,825,420 to $296,208. For investors, the key takeaways are the cost-cutting pay structure, the wiping out of equity incentives, and the shift of retirement liabilities into the bankruptcy process. Mr. Matsen's employment ends June 1, 2006, and his position will not be replaced.

02—Key points

Key Highlights

  1. Delta is operating under Chapter 11, which it entered on September 14, 2005, and the filing says it seeks an additional $3 billion in annual financial benefits by the end of 2007.
  2. All stock options, stock appreciation rights, and other stock-based awards were rejected effective March 31, 2006, with Bankruptcy Court approval, leaving existing equity awards without value.
  3. Executive salaries were reduced 25% for CEO Gerald Grinstein and 15% for other officers effective November 1, 2005.
  4. Delta's common stock was quoted on the Pink Sheets at $0.75 on December 30, 2005, and the company has been delisted from the NYSE.
  5. A Director and Officer Severance Plan, approved by the Bankruptcy Court on February 22, 2006, provides severance from 6 to 12 months of base salary depending on level.
  6. Pre-petition non-qualified nonpilot retirement benefits have ceased, and affected nonpilots would hold unsecured claims in the bankruptcy proceeding.
  7. Audit fees were $4,188,500 for 2005 versus $4,748,203 for 2004, and tax fees fell to $296,208 from $2,825,420, with Deloitte & Touche LLP as independent auditor.

03—Questions

Frequently Asked Questions

  1. Who leads Delta's board and management?

    John F. Smith, Jr. serves as non-executive Chairman of the Board, and Gerald Grinstein serves as Chief Executive Officer and a director. Mr. Grinstein is the only director the Board has determined is not independent, because he became CEO on January 1, 2004.

  2. What happened to executive stock options and equity awards?

    Delta concluded that all stock options, stock appreciation rights, and other stock-based awards would be cancelled as part of its emergence from Chapter 11. In March 2006 it asked the Bankruptcy Court to reject these awards, and the rejection took effect March 31, 2006. No unexercised options were in the money at December 30, 2005, when the stock closed at $0.75.

  3. How were executive pay and retirement benefits affected?

    Executive salaries were cut effective November 1, 2005, by 25% for Mr. Grinstein and 15% for other officers. The nonpilot pension plans were frozen as of December 31, 2005, and pre-petition non-qualified nonpilot benefits have stopped being paid, leaving affected nonpilots with unsecured claims in the bankruptcy.

  4. Who is leaving Delta's executive team?

    Paul G. Matsen, Executive Vice President and Chief Marketing Officer, is departing effective June 1, 2006, as part of a consolidation of executive positions. His responsibilities have been assigned to other officers, and his position will not be replaced.

04—Continue

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