Delta Air Lines, Inc.
Shareholder Annual Meeting in a DEF 14A on 04/30/2021   Download
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SEC Filing
DEF 14A 1 ldal2021_def14a.htm DELTA AIR LINES INC - DEF 14A DELTA AIR LINES, INC. - DEF 14A

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

(RULE 14A-101)

 

INFORMATION REQUIRED IN
PROXY STATEMENT

 

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

 Filed by the Registrant  Filed by a Party other than the Registrant

 

Check the appropriate box:
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Definitive Proxy Statement
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Soliciting Material Pursuant to § 240.14a-12

 

 

DELTA AIR LINES, INC.

 

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS

 

TIME AND DATE:

ACCESS THE ANNUAL MEETING:

RECORD DATE:

Thursday, June 17, 2021
7:30 a.m. Eastern Daylight Time

The annual meeting will be held virtually. Shareholders may participate by logging in at www.virtualshareholdermeeting.com/DAL2021.

April 30, 2021

 

 

 

 

 

AGENDA

At the Annual Meeting, shareholders will be asked to vote on the following proposals:

Board Recommends Vote:

ITEM 1

Election of 12 directors named in the Proxy Statement

FOR each nominee

ITEM 2

Advisory vote on executive compensation

FOR

ITEM 3

Ratification of Ernst & Young LLP as independent auditors for 2021

FOR

ITEM 4

Shareholder proposal regarding right to act by written consent, if properly presented

AGAINST

ITEM 5

Shareholder proposal on a climate lobbying report, if properly presented

AGAINST

 

 

 

In addition, we will transact any other business properly presented at the meeting, including any adjournment or postponement by or at the direction of the Board of Directors.

A list of shareholders entitled to vote at the meeting will be available for examination during normal business hours for ten days before the meeting at Delta’s Investor Relations Department, 1030 Delta Boulevard, Atlanta, Georgia 30354. The shareholder list will also be available at the meeting.

If you plan to attend the meeting virtually, please see the instructions on page 76 of the attached proxy statement.

We encourage shareholders to sign up to receive future proxy materials electronically, including the Notice Regarding the Availability of Proxy Materials. To sign up, visit http://enroll.icsdelivery.com/dal.

 

BY INTERNET IN ADVANCE

BY TELEPHONE

BY MAIL

AT THE MEETING

Go to www.proxyvote.com and follow the instructions

Call 1-800-690-6903

Sign, date and return your proxy card in the enclosed postage-paid envelope

Attend the annual meeting virtually. See page 76 for instructions on how to attend.

 

 

The Notice of Internet Availability of Proxy Materials is being mailed, and the attached proxy statement is being made available, to our shareholders on or about May 7, 2021.

Please read our attached proxy statement carefully and submit your vote as soon as possible. Your vote is important. You can ensure that your shares are voted at the meeting by using our Internet or telephone voting system, or by completing, signing and returning a proxy card.

Atlanta, Georgia
May 7, 2021

 

 

  2021 PROXY STATEMENT 1

LETTER FROM THE NON-EXECUTIVE CHAIRMAN OF THE BOARD

 

 

 

In his letter, Ed will describe to you the tremendous work of the entire Delta family during the course of the COVID-19 pandemic. On behalf of the Board, it has been a privilege to oversee, encourage and support the management team in its strong and thoughtful response to the impact of the pandemic on Delta.

As is described in more detail in the proxy statement, the Board has been extremely engaged throughout the crisis on your behalf, discussing with management as frequently as twice a week in the early days of the pandemic last year and continuing with bi-weekly updates through the first half of this year. We formally met as a board 13 times in 2020, monitoring the impact of the pandemic and the company’s focus on taking care of its employees and customers, protecting its liquidity and preparing for recovery.

The committees of the Board held numerous special meetings and received updates in addition to regular meetings. In addition to the routine areas of oversight, the committees took on expanded duties or had increased activity during the year.

The Audit Committee actively monitored the company’s reporting in the challenging remote working environment.

The Corporate Governance committee received updates on the company’s commitment to carbon neutrality and the ongoing development of the environmental sustainability strategy.

The Finance Committee received numerous updates and provided oversight on the company’s financial condition, liquidity and financing transactions.

The Personnel & Compensation Committee closely monitored and evaluated the impact of the pandemic on 2020 compensation and engaged with management on efforts to improve diversity, equity and inclusion.

The Safety & Security Committee expanded its role in response to the pandemic to oversee the company’s protection of the health of the company’s employees and customers.

The foundation of good governance practices reflected in all of our activity in 2020 has served us well and will continue to do so as recovery accelerates. The combination of the depth of leadership experience among our Board members and specific experience in areas such as cybersecurity, energy, risk management and global security has long been crucial to our collective oversight of the management team.

Even so, we continue to evaluate our own performance and composition regularly. We remain mindful of the need for the Board to possess a wide range of skills, qualifications, experiences and background. In particular, while five of the members of the Board are diverse from a racial, ethnic or gender standpoint, the events of last summer remind us that we can and should continue to improve and enhance diversity in the boardroom.

As we look forward to the second half of this year and the challenges that remain ahead for Delta, the Board welcomes your engagement. We encourage you to share suggestions and concerns with us. In particular, we encourage you to review this proxy statement, and vote in the upcoming meeting.

As always, we deeply appreciate your support as shareholders and customers.

Sincerely,

 

  2021 PROXY STATEMENT 2

LETTER FROM THE CEO

 

2020 was truly a year for the history books. We began the year at our company’s highest point, outlining our vision for the future of travel at a CES keynote; paying a record $1.6 billion in profit sharing to our people; and announcing a 10-year investment toward becoming a carbon neutral airline.

Within weeks of those events, a national emergency was declared over the COVID-19 pandemic, and our business fell to the lowest of lows. Travel demand vanished overnight, our revenues evaporated and our future, at least in the short term, looked uncertain.

As they have so often in the past, the people of Delta led the way as we navigated the darkest days of the pandemic and moved toward recovery. Thanks to their hard work and dedication, during 2020 Delta:

Implemented an unprecedented safety and health program that included extensive cleaning, employee testing, and mask requirements for our planes several months before the federal mask mandate, protecting our employees and customers.

Avoided involuntary furloughs of our U.S. employees thanks to the sacrifices of our people, who took early retirements and departure packages at unprecedented rates, volunteered to take unpaid leaves of absence and worked reduced hours for much of the year.

Raised more than $25 billion in capital to bolster our liquidity – a critical action that, when coupled with much-needed government support to protect airline employee jobs, ensures that Delta is well-positioned as demand returns.

Outperformed our competitors on passenger revenue generation despite having fewer seats for sale, as the only U.S. airline to block the middle seat through the end of 2020 and into 2021.

Our culture demands that we always put people first, with the safety of our employees, customers and communities the first priority in every decision. With positive customer feedback at record levels during the pandemic, we believe our approach is building loyalty that will reward Delta for years to come.

As the pace of vaccinations accelerates, our customers are reclaiming their lives. Air travel will be central as people reconnect with loved ones and business colleagues, replacing their screens with real human touchpoints as they venture out of their homes and communities to experience the world again.

We see the second half of 2021 as the continuation of a meaningful recovery that will grow over the next few years, with Delta leading the way as economies reopen and flourish.

Our efforts to transform the air travel experience remain underway – in fact, we’ve sped up the timeline by accelerating our fleet renewal plans and airport construction projects in Los Angeles, New York and elsewhere.

And our commitment to environmental sustainability and addressing climate change remains in full force through a plan that seeks to balance near-term and long-term solutions and encompasses carbon reduction and removal, stakeholder engagement and coalition building. We plan to spend more than $30 million this year on verified offsets to mitigate 13 million metric tons of carbon dioxide emissions from our airline business from March 1, 2020 through the end of 2020.

We also were motivated in 2020 to take a hard look at diversity, equity and inclusion at Delta. While we have a lot to be proud of, we know that we can do better. That’s why we’ve committed to a slate of actions to create more opportunities for our Black employees and help make Delta a truly just, equitable and anti-racist company.

From any standpoint, 2020 was the hardest year in Delta’s history. But it was also among our proudest moments. It was a year that revealed our character and reminded us that our people are our most powerful asset. Thanks to the experiences and lessons of 2020, the Delta that we’re rebuilding today will be stronger and more successful for many years to come.

Thank you for your support throughout the past year. We look forward to speaking with you at our annual meeting in June.

Sincerely,

 

  2021 PROXY STATEMENT 3

 TABLE OF CONTENTS

 

 

  2021 PROXY STATEMENT 4
   

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PROXY STATEMENT SUMMARY

The Delta Difference

As a global airline based in the U.S., Delta connects customers across our expansive global network. In 2019, we connected over 200 million customers to more than 300 destinations in over 50 countries. Following the onset of the COVID-19 pandemic in 2020, Delta responded quickly to protect our people, our customers and our financial position, driven by the unwavering dedication and commitment of the Delta people. The pandemic required significant adjustments to our network and operations due to travel restrictions and the decline in demand. We nonetheless served approximately 70 million customers during 2020, many of them prior to the onset of the pandemic.

Our achievements over the last decade produced a strong financial foundation, record customer satisfaction scores, diversified revenue streams and a scale advantage through the transformation of our global network – living up to our brand promise of connecting the diverse people and communities of the world better than any other airline. Our proven track record positioned Delta to navigate the crisis and emerge as a stronger, more resilient airline.

POWERFUL CONSUMER
BRAND

UNMATCHED COMPETITIVE
ADVANTAGES

PROVEN TRACK RECORD OF
EXECUTION

Delta is an exceptional, trusted consumer brand that consistently delivers a superior travel experience.

Over the last decade, we have set the global standard for reliability, service and customer experience. Customer satisfaction scores have increased substantially during this time, with our domestic net promoter score in 2020 reaching nearly 67%. Our unwavering dedication to cleanliness and health and safety practices, including the hiring of the industry’s first Chief Health Officer in early 2021, position us to continue earning our customers’ trust and preference.

In 2020, Delta was named one of Fortune’s Most Admired Companies and its Most Admired Airline for the ninth time in the past ten years. We ranked #1 in The Business Travel News Annual Airline survey for the 10th consecutive year and were recognized by Glassdoor as one of the Best Places to Work for the fifth consecutive year - ranking 7th on the list of 100 companies.

Delta’s most important competitive advantage is our professionals worldwide, who consistently deliver industry-leading results with unmatched empathy and a spirit of innovation. During 2020, the dedication and determination of our people to protect our customers, our communities and our company’s future continued to set us apart, enabling Delta to provide essential travel and avoid involuntary furloughs of our U.S. employees.

We believe that our global network has the best domestic connecting hub complex – including the world’s most efficient hub in Atlanta - enhanced by strong international alliances and joint ventures that span the globe.

Our trusted, global brand and strong relationship with American Express® combine to produce customer loyalty and a diversified, high-margin revenue stream. The value of this relationship was demonstrated in 2020 through our $9 billion SkyMiles® debt financing, which is secured by, among other things, our SkyMiles program cash flows.

Over the last decade we have fundamentally transformed our business, creating a customer-focused operation with industry-leading products, reliability and service and a strong financial foundation.

Delta’s revenues increased by over $6 billion from 2015 to 2019 as we invested in diversified revenue streams, which have been more resilient during the pandemic than passenger revenues. Over the same period, we generated cumulative operating cash flow of more than $35 billion, free cash flow of more than $18 billion and annually produced $5 billion or more in pre-tax income, positioning us as the world’s most profitable airline. Delta paid more than $1 billion annually in profit sharing to our people between 2015 and 2020.

The balance sheet strength built over the last decade allowed us to manage through the crisis with minimal shareholder dilution. We have already begun restoring our balance sheet after raising more than $25 billion to bolster our liquidity during 2020. By the middle of 2021, we expect to have reduced our financial obligations nearly $10 billion since last fall through debt repayments and accelerated pension funding.

 

 

  2021 PROXY STATEMENT 5
   

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Matters to be Presented at the Annual Meeting

ITEM 1

Election of Directors

 

At the Annual Meeting, shareholders will be asked to vote on the election of the 12 directors shown below. The Board’s recommendation is to vote FOR each nominee. See pages 58-64 for more information.

         
 

EDWARD H. BASTIAN

 

CEO of Delta

 

     

FRANCIS S. BLAKE

 

Non-Executive Chairman of the Board of Delta; former Chairman and CEO of The Home Depot

 

     

ASHTON B. CARTER

 

Director of the Belfer Center for Science and International Affairs at Harvard Kennedy School

 

 
  Age: 63         Age: 71 INDEPENDENT       Age: 66 INDEPENDENT  
  Director since 2010       Director since 2014       Director since 2017  
  Other Public Boards: 1         Other Public Boards: 2

COMMITTEES:

Corporate Governance, Finance and Personnel & Compensation

      Other Public Boards: 1

COMMITTEES:

Audit and Safety & Security

 

 
         
         
         
 

DAVID G. DEWALT

 

Chairman of NightDragon Acquisition Corp; Founder and Managing Director of NightDragon Security; former Executive Chairman and CEO of FireEye

 

     

WILLIAM H. EASTER III

 

Former Chairman, President and CEO of DCP Midstream

 

     

CHRISTOPHER A. HAZLETON

 

Captain, Airbus 321, Delta

 

 
  Age: 57 INDEPENDENT       Age: 71 INDEPENDENT       Age: 53    
  Director since 2011       Director since 2012       Director since 2019  
  Other Public Boards: 2

COMMITTEES:

Audit, Corporate Governance and Safety & Security

 

      Other Public Boards: 2

COMMITTEES:

Audit, Corporate Governance and Safety & Security

 

      Other Public Boards: 0

COMMITTEES:

Safety & Security

 

 
         
         
         
 

MICHAEL P. HUERTA

 

Former Administrator of the Federal Aviation Administration

 

     

JEANNE P. JACKSON

 

Former President, Senior Strategic Advisor to the CEO of NIKE

 

     

GEORGE N. MATTSON

 

Co-Chairman of NextGen Acquisition Corp I and II; former Partner of Goldman Sachs

 

 
  Age: 64 INDEPENDENT       Age: 69 INDEPENDENT       Age: 55 INDEPENDENT  
  Director since 2018       Director since 2017       Director since 2012  
  Other Public Boards: 0

COMMITTEES:

Audit and Safety & Security

 

      Other Public Boards: 1

COMMITTEES:

Finance and Personnel & Compensation

 

      Other Public Boards: 3

COMMITTEES:

Corporate Governance, Finance and Personnel & Compensation

 

 
         
         
         
 

SERGIO A.L. RIAL

 

CEO of Banco Santander Brazil

 

     

DAVID S. TAYLOR

 

Chairman, President and CEO of The Procter & Gamble Company

 

     

KATHY N. WALLER

 

Former Executive Vice President, CFO and President, Enabling Services, of The Coca-Cola Company

 

 
  Age: 60 INDEPENDENT       Age: 63 INDEPENDENT       Age: 62 INDEPENDENT  
  Director since 2014       Director since 2019       Director since 2015  
 

Other Public

Boards: 2 (parent-sub)

 

COMMITTEES:

Corporate Governance, Finance
and Personnel & Compensation

 

      Other Public Boards: 1

COMMITTEES:

Finance and Personnel & Compensation

 

      Other Public Boards: 3

COMMITTEES:

Audit, Corporate Governance and Personnel & Compensation

 

 
         

 

Committee Chair

 

  2021 PROXY STATEMENT 6
   

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Shareholders will also be asked to vote on the following proposals:

 

 

 

ITEM 2

Advisory vote on executive compensation

FOR

65

ITEM 3

Ratification of Ernst & Young LLP as independent auditors for 2021

FOR

66

ITEM 4

Shareholder proposal regarding right to act by written consent, if properly presented

AGAINST

69

ITEM 5

Shareholder proposal on a climate lobbying report, if properly presented

AGAINST

71

 

Executive Compensation Program

Our executive compensation program is based on the philosophy that we can best achieve our short-term and long-term business goals, which we refer to as our Flight Plan, by closely linking pay to performance and aligning the interests of all Delta employees, including executive officers, with those of our customers and shareholders. Consistent with past years, the Personnel & Compensation Committee set rigorous performance measures and goals under our annual and long-term incentive programs in February 2020, prior to the declaration of the COVID-19 pandemic by the World Health Organization. Following the onset of the pandemic, the Committee monitored the impact of COVID-19 on these measures and goals.

Our leadership team has shown exceptional performance in managing the company in the face of the unprecedented challenges resulting from the pandemic. Notwithstanding these significant accomplishments, due to the impact of the pandemic on our business and our focus on compensation that is both performance-based and employee-aligned, the following actions were taken with respect to 2020 executive compensation:

Reduced base salaries of our officers from April 1 through December 31, 2020

Eliminated annual incentive plan payouts despite attainment of certain performance measures under the plan because no payouts were made to our frontline employees under the company’s broad-based employee profit sharing program (Profit Sharing Program)

Did not alter the performance measures or goals for outstanding long-term incentive awards

For additional information on these and other decisions regarding 2020 executive compensation, see the “Compensation Discussion and Analysis” section beginning on page 24 of this proxy statement.

 

  2021 PROXY STATEMENT 7

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Shareholder Engagement

We value our relationships with our shareholders, and we have a long-standing practice of active engagement with them. These engagement efforts allow us to better understand our shareholders’ priorities, perspectives and concerns, and position us to effectively address issues that are important to our shareholders. During 2020, despite the COVID-19 pandemic, we met virtually, or initiated contact, with shareholders representing approximately 70% of our outstanding shares, including actively managed funds, index funds, public pension funds, and socially responsible investment funds. We also have dedicated resources to engage with our shareholders, including individual shareholders, through monitoring of communications received by our investor relations and sustainability departments, which collectively responded to more than 100 inquiries during 2020. The table below summarizes key aspects of these engagement efforts during 2020.

 

 

 

  2021 PROXY STATEMENT 8

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Environmental, Social and Governance (ESG) Highlights

We are committed to being a good steward of the environment, taking care of our people and being a positive force in our communities. This commitment is based on our culture of putting people first in all we do - whether it’s our employees, the customers who trust us with their travel each year, or the millions who make up the communities where we live, work and serve.

Our Commitment to the Environment

As a responsible business, we remain mindful of the impact of our global decisions. Nowhere is this clearer than in our vision and approach to reducing carbon emissions and managing our environmental impact.

ENVIRONMENTAL SUSTAINABILITY PROGRAM OVERSIGHT

The oversight of our environmental sustainability program is guided by the following:

Regular Board-level oversight, through the Corporate Governance Committee, of environmental sustainability opportunities and risks, and efforts and progress with respect to these matters

Continuing cross-divisional management and executive-level oversight of environmental sustainability initiatives and guidance on priorities

Engagement of a cross-divisional group that develops risk mitigation strategies, including climate change issues, and updates its assessment of such risks as operational conditions change

ACTIONS TOWARD VISION OF ZERO-IMPACT AVIATION

The aviation industry accounts for roughly 2 percent of global carbon emissions. Our carbon footprint is our largest environmental impact, with 98 percent of carbon emissions from our air transportation business coming from jet fuel. In February 2020, we committed $1 billion over a 10-year period for the purpose of advancing our goal of carbon neutrality. Despite the COVID-19 pandemic, we have made progress toward - and reiterated our focus on - achieving this ambitious goal. In March 2021, we announced our long-term vision of zero-impact aviation, which we define as air travel that does not damage the environment directly or indirectly via greenhouse gas emissions, noise, waste generation or other environmental impacts. Our environmental sustainability plan, which is guiding our efforts to achieve carbon neutrality, is focused on three areas: carbon reduction and removal, stakeholder engagement and coalition building, each of which is described in further detail below.

 

Carbon Reduction and Removal

Fleet Replacement

Replacing older mainline aircraft with new aircraft that are typically 25% more efficient on a per available seat mile basis than the aircraft they replace. In 2020, Delta retired more than 200 aircraft, and our fleet efficiency per available seat mile improved compared to 2019.

Sustainable Aviation Fuel

Seeking to replace 10 percent of our jet fuel refined from fossil fuel with sustainable aviation fuel (SAF) by the end of 2030. We have entered into agreements to purchase a future supply of 70 million gallons of SAF per year by 2025, representing a projected 1.7 percent of our total annual fuel consumption based on 2019 flying levels.

Other Developing Technologies

Evaluating opportunities related to potentially transformative technologies that would permit carbon capture and innovation in propulsion, post-combustion emission controls, electric power delivery and fuel cells. While many of these technologies are in early development stages, we are evaluating paths to accelerate and support their advancement.

Carbon Offsets

Investing in verified carbon offset projects in the near term that lead to carbon avoidance, reduction and removal. Consistent with our February 2020 commitment, we are addressing the 13 million metric tons of carbon dioxide emissions that were generated from our airline business from March 1, 2020 through December 31, 2020 through offset projects such as those to ensure maintenance and protection of forests.

 

  2021 PROXY STATEMENT 9
   

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Stakeholder Engagement

Partnering with corporate customers to address emissions, including entry into agreements with corporate customers to purchase SAF facilitated by Delta

Actively collaborating with the FAA and the airline industry to modernize the air traffic control (ATC) system through forums such as the NextGen Advisory Committee (NAC) in an effort to reduce delays, decrease fuel consumption, and cut carbon emissions by shortening flights and providing more direct routes

Engaging with industry, government and ICAO on CORSIA and other climate and environmental policy to advance environmental sustainability of the aviation industry

 

Coalition Building

Participating in MIT’s Industry Liaison Program to better understand and quantify aviation’s environmental impacts and inform a long-term plan to support industry innovation

Partnering with suppliers and other industry participants to drive down the cost and increase the consumption and production of SAF and carbon capture technology

 

 

 

TRANSPARENCY AND REPORTING

We plan to report our environmental sustainability practices through an annual ESG report that is mapped to the SASB and TCFD frameworks and indicators, which is intended to build on the key themes addressed in the corporate responsibility reports we have issued in prior years. During 2020, we also prepared and reviewed reports related to numerous customer, industry and rating agency ESG disclosures, including Sustainalytics and MSCI, while engaging with shareholders and other organizations on ESG trends and opportunities.

Dow Jones North American Sustainability Index
(10th year in a row)

 

FTSE4 Good, European (Sustainability) Index
(6th consecutive year)

 

Management band from CDP
B Score

CDP evaluates how companies measure and manage their risks and opportunities on climate change

 

The Climate Registry
Continued verification of our greenhouse gas emissions footprint

 

More information about our environmental sustainability practices can be found in our 2020 ESG report, which will be available at www.delta.com/sustainability. This website and the materials available on or through it are not incorporated by reference into this proxy statement.

 

  2021 PROXY STATEMENT 10

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Our Commitment to Our People and Our Communities

We believe that Delta people are our strongest competitive advantage, and they have created a culture that is the foundation of our success. We have long understood that taking care of our people also leads to satisfied customers and other stakeholders. The dedication and determination of Delta people in response to the unprecedented challenges we faced due to the COVID-19 pandemic enabled us to avoid involuntary furloughs of U.S. employees, with over 50,000 employees volunteering to take unpaid leaves of absence, approximately 18,000 employees participating in early retirement and voluntary separation programs and, from April 1 through December 31, 2020, most employees working reduced hours. Throughout the pandemic, the Delta people have driven record net promoter scores and enhanced trust in our brand, which remained the most valuable in the airline industry during 2020.

 

SAFETY AND HEALTH

The safety and health of our employees and customers is paramount. Our dedication to safety, security and public health is spearheaded by our executive leadership team and overseen by the Safety and Security Committee. We have led the airline industry for many years in employee safety and seek to achieve world-class personal safety performance.

 

 

 

Following the onset of the pandemic, we created pay protection programs for employees with symptoms, diagnosed, exposed or at high risk for severe illness from COVID-19 and established a notification process for potential COVID-19 exposure. We also assembled a COVID-19 task force to develop a series of safety measures in an effort to protect our employees and customers, including offering on-site rapid COVID-19 testing in most locations and making at-home testing available for all U.S.-based employees, and offering a return-to-work safety training program. In early 2021, we began offering vaccination resources to our employees at various U.S. locations and hired our first Chief Health Officer to lead Delta’s efforts to reimagine our approach to health and well-being as well as our ongoing drive to reduce workplace injuries and accommodate the physical and mental health needs of our people over the entire span of their time at Delta.

Beyond employee safety and health, we proactively reduce risks by identifying, assessing, mitigating and/or eliminating hazards that may cause incidents, accidents or injuries to customers. We have intensified our focus on ensuring the safety and health of our customers since March 2020, including through the creation of our Global Cleanliness organization and implementation of the Delta CareStandardSM to ensure a consistently safe and sanitized experience across our facilities and aircraft.

Safety & Security Committee charter revised in 2020 to acknowledge the committee’s role in overseeing public health matters

 

DIVERSITY, EQUITY AND INCLUSION

As a global airline, we are in the business of bringing people together, and we believe our business should reflect the diversity of our customer base. To achieve this goal, we seek diverse talent internally and externally in an effort to achieve broader diverse representation throughout our organization.

The Personnel & Compensation Committee provides ongoing oversight with respect to policies and strategies relating to talent development and human capital management, including diversity, equity and inclusion. Our Diversity, Equity & Inclusion Council is the senior cross-divisional group that represents the operation, corporate and commercial organizations of our business and is charged with ensuring our diversity, equity and inclusion priorities are relevant and embedded throughout the company, in partnership with our Diversity, Equity & Inclusion Office. The council meets regularly to evaluate corporate and divisional metrics, programs and proposals that align with our diversity, equity and inclusion strategy.

During 2020, we strengthened our commitment to be an anti-racist, anti-discrimination organization. Key elements of our strategy to realize this goal include the following:

Reimagining our talent strategy, such as by requiring hiring candidate slates and interview panels to reflect diversity, removing qualification barriers for roles that do not require college degrees and allowing equal consideration for relevant experience and certifications

Closing diversity gaps in senior leadership positions by increasing the representation of minority and female officers, including doubling the number of Black officers and director-level employees by 2025

Promoting inclusion through education, training and development opportunities and by leveraging insights from our business resource groups

Driving accountability for equitable outcomes by reviewing and revising our systems, practices and policies and measuring inclusive behaviors, practices and representation

 

  2021 PROXY STATEMENT 11

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COMMUNITY IMPACT

As we connect people with communities, experiences and each other, we are dedicated to doing our part to build a better world. Giving back to the communities where we live, work and serve is part of our culture, and we have maintained this commitment throughout the COVID-19 pandemic. The graphic below illustrates the numerous ways in which Delta people gave back in 2020.

 

 

Our focus on advancing diversity, equity and inclusion extends into the communities around us. During 2020, we announced our efforts to create more opportunities for underrepresented groups and to support Black business partners in the following ways:

Establishing new partnerships with organizations driving systemic change, primarily in the areas of social injustice, economic empowerment and wealth development

Continuing our partnership with Operation HOPE by supporting business literacy and coaching those in underrepresented communities

Diversifying our supply chain and doubling our spending with Black-owned businesses by 2025, while seeking diverse business partners for Delta’s COVID-19 recovery strategy

Requiring each bidding and request-for-proposal process for new business relationships to include participation from minority-owned businesses

 

  2021 PROXY STATEMENT 12

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Our Commitment to Leading Governance

Delta has a history of a strong, independent Board, composed of seasoned members who are diverse with respect to background, skills, experiences, gender, race and ethnicity. The Board is committed to sound corporate governance in line with evolving best practices.

 

CORPORATE GOVERNANCE HIGHLIGHTS

Independent oversight

10 of 12 director nominees are independent (all except the CEO and ALPA nominee)

Independent non-executive chairman with clearly defined and robust responsibilities

Active Board oversight of strategy, risk management, environmental sustainability and human capital management

Board refreshment

Regular Board refreshment and mix of tenure and diversity of directors (4 independent directors joined in the last 4 years, 2 of whom are diverse)

Robust annual self-evaluations of Board and Board committees

Retirement age of 72 for outside directors

Shareholder rights and accountability

Annual election of all directors

Proxy access right for shareholders

Majority vote and director resignation policy for directors in uncontested elections

Shareholders constituting more than 20% of our outstanding common stock can call a special meeting

One class of outstanding shares with each share entitled to one vote

No shareholder rights plan (poison pill) or supermajority voting

Other leading governance practices

Regular comprehensive succession planning for management

Anti-hedging and anti-pledging policy for all employees and Board

Prohibition on ownership of specific airline competitors’ stock by Board and officers

Robust stock ownership and retention guidelines for Board and executive officers

No employment agreements or supplemental executive retirement plans for officers

Robust political activities disclosures available through our website

 

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GOVERNANCE - BOARD MATTERS

During 2020, the Board of Directors met 13 times. Each director who served on the Board during 2020 attended at least 75% of the meetings of the Board of Directors and the committees on which he or she served that were held during his or her tenure on the Board or relevant committee. It is the Board’s policy that directors are encouraged to attend the annual meeting. All of Delta’s directors attended the annual meeting in 2020. During the year, the Board routinely held executive sessions without the Chief Executive Officer. Mr. Blake presided at these sessions as non-executive Chairman of the Board.

In addition to formal meetings, the Board members participated in 17 update calls with management during 2020 and have continued to participate in frequent calls during the first half of 2021.

Board Leadership Structure

Because we believe operating pursuant to sound governance practices benefits the long-term interests of our shareholders, for many years we have chosen to elect an independent, non-executive Chairman of the Board separate from our Chief Executive Officer.

We believe the non-executive Chairman of the Board plays an important governance leadership role that enhances long-term shareholder value. The Chairman’s responsibilities include:

 

chairing meetings of non-management directors (executive sessions)

presiding at the annual meeting of shareholders

briefing the Chief Executive Officer on issues raised in executive sessions

in collaboration with the Corporate Governance Committee, committee chairs, the Chief Executive Officer and the Chief Legal Officer, scheduling Board meetings, setting Board agendas and strategic discussions and providing a review of pre-meeting materials delivered to directors

overseeing annual Board, committee and Chief Executive Officer performance evaluations and succession planning

managing the Board and committee oversight of risks

recommending appropriate governance policies and practices

overseeing the avoidance of conflicts of interest

recommending Board committee and committee chair assignments

facilitating director discussions inside and outside the boardroom, managing the relationship between the Chief Executive Officer and the Board, consulting with the Chief Executive Officer and serving as a counterweight as appropriate

overseeing the process for selecting new Board members

calling meetings of the Board and shareholders

chairing the Corporate Governance Committee

carrying out other duties requested by the Chief Executive Officer and the Board

Board Committees and Governance Documents

The Board of Directors has established the Audit, Corporate Governance, Finance, Personnel & Compensation and Safety & Security committees to assist it in discharging its responsibilities. The number of meetings held by each of these committees in 2020 and the committee’s primary responsibilities are listed on the next page. A detailed list of the responsibilities of each committee can be found in the committee charters, which are available in the corporate governance section of our website at ir.delta.com/governance/. Our Certificate of Incorporation, Bylaws, Corporate Governance Principles, codes of ethics and business conduct and director independence standards are also available in the corporate governance section of our website at ir.delta.com/governance/. This website and the materials available through it are not incorporated by reference into this proxy statement.

 

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All members of the Audit, Corporate Governance, Finance and Personnel & Compensation Committees are non-employee directors who are independent, as defined in the New York Stock Exchange (NYSE) listing standards and Delta’s director independence standards. Prior to his retirement from the Board in 2020, Dan Carp was also independent. In addition, the members of the Audit Committee and the members of the Personnel & Compensation Committee satisfy the additional independence requirements set forth in rules under the Securities Exchange Act of 1934 (the 1934 Act).

AUDIT COMMITTEE

Members

Primary Responsibilities

William H. Easter III* (Chair)

Ashton B. Carter

David G. DeWalt*

Michael P. Huerta

Kathy N. Waller*

Meetings in 2020: 10

 

oversees our financial reporting and disclosure processes, including the appointment of our independent auditors, the review of the audit and work of our internal audit department and the adequacy and effectiveness of our internal controls over financial reporting

oversees compliance with procedures and processes pertaining to corporate ethics and standards of conduct

reviews enterprise risk management processes and discusses major risk exposures with management

reviews cybersecurity risks and the security and operations of our information technology systems

reviews and, if appropriate, approves or ratifies possible conflicts of interest involving members of the Board or executive officers and related party transactions that would be subject to disclosure under Item 404 of Regulation S-K

*Audit Committee Financial Experts

The Audit Committee Report can be found on page 68.

 

CORPORATE GOVERNANCE COMMITTEE

Members

Primary Responsibilities

Francis S. Blake (Chair)

David G. DeWalt

William H. Easter III

George N. Mattson

Sergio A. L. Rial

Kathy N. Waller

Meetings in 2020: 5

leads the Board’s governance practices and procedures, including the search for and recruiting of new outside directors and consideration of nominees for the Board

oversees our governance standards, processes for evaluation of the Board and its committees, and compensation of non-employee directors

oversees our environmental sustainability opportunities and risks, and efforts and progress with respect to these matters

periodically reviews reports on our corporate and PAC political contributions and charitable contributions made by Delta or the Delta Foundation

 

FINANCE COMMITTEE

Members

Primary Responsibilities

George N. Mattson (Chair)

Francis S. Blake

Jeanne P. Jackson

Sergio A. L. Rial

David S. Taylor

Meetings in 2020: 14

reviews and makes recommendations about the financial structure of the company, financial planning, investments (including strategic investments in our overseas commercial airline partners), acquisitions and divestitures, operating plans, capital structure and hedging activities

reviews and approves or recommends to the Board commitments, capital expenditures and financing transactions

 

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PERSONNEL & COMPENSATION COMMITTEE

Members

Primary Responsibilities

Sergio A. L. Rial (Chair)

Francis S. Blake

Jeanne P. Jackson

George N. Mattson

David S. Taylor

Kathy N. Waller

Meetings in 2020: 12

oversees our general compensation philosophy and practices and the annual review of our Chief Executive Officer and reviews and approves compensation programs for our executive officers

reviews management succession plans and the company leader and talent planning process

makes recommendations to the Board regarding election of officers

oversees policies and strategies relating to talent development and human capital management, including diversity, equity and inclusion

The Personnel & Compensation Committee Report can be found on page 39.

SAFETY & SECURITY COMMITTEE

Members

Primary Responsibilities

David G. DeWalt (Chair)

Ashton B. Carter

William H. Easter III

Christopher A. Hazleton

Michael P. Huerta

Meetings in 2019: 6

oversees and consults with management on our customer, employee and aircraft operating safety, security and customer and employee health

reviews current and proposed safety and security-related programs, policies and compliance matters

reviews issues that may have a material effect on our flight safety operations, security and public health matters

establishes and approves annual safety and security goals

 

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Board Refreshment Process

The Corporate Governance Committee recommends to the Board of Directors nominees for election to the Board. Delta believes each current nominee for the Board of Directors has the following attributes:

integrity, honesty and adherence to high ethical standards

extensive business acumen and sound judgment

a track record of service as a leader in business or governmental settings

commitment to diversity, equity and inclusion

The Committee seeks nominees who have the skills and experience to assist management in the operation of Delta’s business and to provide input on Delta’s strategy, among other matters. In accordance with Delta’s Corporate Governance Principles, the Committee and the Board assess potential nominees (including incumbent directors). In its succession planning role, the Committee regularly considers potential candidates for the Board in light of the company’s new and evolving risks, strategies and operations as follows:

 

 

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Board and Committee Evaluation Process

For many years our Board of Directors and each of its committees have annually engaged in comprehensive self-evaluations.

 

 

 

The Board believes this annual evaluation process supports its effectiveness and continuous improvement.

Risk Management

Board Oversight

The Board of Directors has ultimate responsibility to oversee Delta’s enterprise risk management program (ERM). Coordinated by the head of Delta’s Corporate Audit & Enterprise Risk Management department, the ERM program instills a heightened awareness of risk, management throughout Delta, identifies and categorizes risks and monitors the progress of enterprise risk mitigation plans. The role of ERM is to provide a risk management framework with cross functional alignment to enable risk informed decision-making through identification and categorization of risks and monitoring the progress of enterprise risk mitigation plans.

The Board discusses risk throughout the year, particularly when reviewing operating and strategic plans and when considering specific actions for approval. Depending on the nature of the risk, the responsibility for oversight of selected risks may be delegated to appropriate committees of the Board, with material findings reported to and discussed with the full Board.

The Board’s oversight of risk management is managed through delegation to each of the Board’s committees.

 

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Management’s Role

Delta’s ERM process is a journey of continuous improvement and iteration to meet the evolving needs of our business. Leaders of the business divisions, working closely with the ERM leader, have responsibility for risk identification, development of business risk mitigation plans, and monitoring and reporting progress of their implementation. Delta’s leadership structure, combined with the roles of the Board, its committees, and the Delta Risk Council (DRC), provide appropriate leadership for effective risk oversight.

Delta Risk Council

The senior management level, cross-divisional DRC meets quarterly and includes the Chief Financial Officer, Chief Information Officer, Chief Legal Officer, Senior Vice President - Corporate Safety and Security, Controller, Chief Information Security Officer, Chief Compliance Officer and the head of the Corporate Audit & Enterprise Risk Management department, among others. As appropriate, various officers and employees attend meetings of the DRC and follow up on issues addressed within the DRC.

 

The DRC oversees all areas of the company’s business risk, including financial reporting, information security and safety and security risks, including the following: monitoring risk tolerance levels; defining organizational responsibilities for risk management; identifying significant risks to Delta; and risk mitigation and management strategies based on Delta’s risk tolerance levels as well as monitoring the business to determine that risk mitigation activities are in place and operating.

 

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Communications with Directors

Shareholders and other interested parties may communicate with our non-management directors by sending an e-mail to nonmgmt.directors@delta.com. We have established a link to this address on our Investor Relations website. Communications with directors may also be mailed to Delta’s Corporate Secretary at Law Department, Delta Air Lines, Inc., Department 981, P.O. Box 20574, Atlanta, Georgia, 30320. Communications will be sent directly to the Chairman of the Board, as representative of the non-management directors, other than communications pertaining to customer service, human resources, accounting, auditing, internal control and financial reporting matters. Communications regarding customer service and human resources matters will be forwarded for handling by the appropriate Delta department. Communications regarding accounting, auditing, internal control and financial reporting matters will be brought to the attention of the Audit Committee chair.

 

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SHARE OWNERSHIP

Directors and Executive Officers

The following table sets forth the number of shares of Delta common stock beneficially owned as of April 15, 2021, by each director and director nominee, each person named in the Summary Compensation Table in this proxy statement, including two former executive officers of Delta who left Delta during 2020, and all directors and current executive officers as a group. Unless otherwise indicated by footnote, the owner exercises sole voting and investment power over the shares listed.

Name of Beneficial Owner

Amount and Nature of Beneficial Ownership

(1) 

Directors:

 

 

Edward H. Bastian

1,572,797

(2) 

Francis S. Blake

63,245

 

Ashton B. Carter

15,690

 

David G. DeWalt

60,410

 

William H. Easter III

53,860

(3) 

Christopher A. Hazelton

300

 

Michael P. Huerta

15,515

 

Jeanne P. Jackson

44,300

(4) 

George N. Mattson

111,350

(5) 

Sergio A.L. Rial

20,348

 

David S. Taylor

16,650

 

Kathy N. Waller

23,040

 

Named Executive Officers:

 

 

Glen W. Hauenstein

693,144

(2) 

Peter W. Carter

325,545

(2) 

Rahul D. Samant

161,944

(2) 

William C. Carroll

60,825

(2) 

Garrett L. Chase

51,468

(2) 

Paul A. Jacobson

323,836

(2)(6) 

W. Gil West

419,634

(2) 

Directors and Current Executive Officers as a Group (21 Persons)

4,022,386

(2) 

(1) 

Each of the individuals listed in the table and the directors and current executive officers as a group beneficially owned less than 1% of the shares of common stock outstanding on April 15, 2021.

(2) 

Includes the following number of shares of common stock which a director or a named executive officer has the right to acquire upon the exercise of stock options that were exercisable as of April 15, 2021, or that will become exercisable within 60 days after that date:

 

Name

Number of Shares

Edward H. Bastian

1,104,730

Glen W. Hauenstein

421,484

Peter W. Carter

134,654

Rahul D. Samant

90,277

William C. Carroll

30,784

Garrett L. Chase

28,937

Paul A. Jacobson

205,164

W. Gil West

379,714

Directors & Current Executive Officers as a Group

2,093,946

(3) 

Includes 48,170 shares held by the Easter Management Trust, over which Mr. Easter has shared investment and voting power.

(4) 

Includes 22,000 shares held by a trust for the benefit of Ms. Jackson and her husband and 3,510 shares held by trusts for the benefit of Ms. Jackson’s children. Ms. Jackson has shared investment and voting power over all shares held in these trusts.

(5) 

Includes 2,000 shares held by Mr. Mattson’s wife, 6,000 shares held through trusts for the benefit of Mr. Mattson’s children and for which Mr. Mattson’s wife serves as trustee; also includes 2,000 shares held by a trust for the benefit of Mr. Mattson’s adult son, over which Mr. Mattson has shared investment power and which is not required to be reported on a Form 4.

(6) 

Includes 12,500 shares held by a family foundation, of which Mr. Jacobson and his wife are the trustees. Mr. Jacobson has shared investment and voting power with respect to these shares.

 

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Beneficial Owners of More than 5% of Voting Stock

The following table provides information about the following entities known to Delta to be the beneficial owner of more than five percent of Delta’s outstanding common stock as of April 15, 2021.

Name and Address of Beneficial Owner

Amount and Nature of

Beneficial Ownership

Percentage of Class

The Vanguard Group

65,199,619(1)

10.2%

100 Vanguard Blvd
Malvern, PA 19355

 

 

BlackRock, Inc.

35,684,640(2)

5.6%

55 East 52nd Street
New York, NY 10055

 

 

(1) 

Based on an amendment to Schedule 13G filed on February 10, 2021, in which The Vanguard Group reported that, as of December 31, 2020, it had shared voting power over 737,578 of these shares, sole dispositive power over 63,210,922 of these shares and shared dispositive power over 1,988,697 of these shares.

(2) 

Based on an amendment to Schedule 13G filed on January 29, 2021, in which BlackRock, Inc. reported that, as of December 31, 2020, it had sole voting power over 32,058,002 of these shares and sole dispositive power over 35,684,640 shares.

 

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EXECUTIVE COMPENSATION

Note from the Chairman of the Personnel & Compensation Committee

 

At this time last year my predecessor addressed the impact of COVID-19 on Delta’s business, as well as actions the Board and Delta management took on executive compensation in the early stages of the pandemic. We initially hoped these actions would be short-term, but they continued throughout 2020. Thanks to their sacrifices and aided by relief the U.S. government provided through the CARES Act, we avoided involuntary furloughs of our U.S. employees. Today I share with you decisions made since April 2020 involving executive compensation.

As our pay for performance philosophy demands, Delta’s executive compensation program appropriately rewards exceptional performance, but with a large majority of pay at risk and subject to market-based valuations. After many years of record financial, operational and customer service results, the COVID-19 pandemic devastated the airline industry, making the performance measures and goals we approved in early February 2020, as well as those under our 2018 and 2019 long-term plans, effectively obsolete.

In the process of determining how best to handle the up Eliminate space ending of our annual and long-term incentive plans, the Committee focused on two guiding principles developed with the executive leadership team. First, to continue the alignment of pay for performance between frontline employees and management – especially given no profit sharing for 2020. Second, to keep a meaningful portion of total compensation at risk for our senior management. Consistent with these principles, senior management took voluntary reductions in pay (with Ed Bastian taking no salary and all other officers taking a 50% reduction from April on) and recommended elimination of payouts under the annual incentive plan. These principles also led the Committee to make no changes to the annual and 2020 long term incentive plans. As a result, by December, a significant portion of the intended value of the 2020 long-term incentive awards had evaporated. For example, the value of our CEO’s 2020 compensation at year-end decreased by 68 percent when compared to his 2019 summary compensation table pay and decreased by over 57 percent when compared to its value in early February 2020.

Over this same period, senior management’s unwavering belief in and care for our people led to their redoubling of efforts to retain the best talent in industry, preserve Delta’s culture and ensure the organization’s successful recovery. In alignment with Delta’s compensation philosophy, they also focused on the financial impact the COVID-19 pandemic had on the earned compensation of all employee groups by conducting a comprehensive pay review and ensuring the financial sacrifices experienced by all employees were equally shared on a percentage basis.

Throughout 2020, the actions by both the Committee and senior management remained principle-based and aligned with Delta’s compensation philosophy. Yet, the Committee also knew the decision to maintain the status quo for 2020 would require us to develop a program for 2021 to reward the hard work and maintain the loyalty of our executives, recognize the overall reduction of their outstanding incentive compensation opportunities and comply with the compensation limitations of the CARES Act.

It was an eventful time to begin my tenure as Chairman, but I am confident the Committee is providing the necessary support and oversight for management as it leads Delta through its recovery and into its bright future.

 

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Compensation Discussion and Analysis

This section of the proxy statement describes the compensation of our named executive officers for 2020. It also discusses how our executive compensation program reflects our compensation philosophy and objectives, including the importance of linking pay to performance.

 

2020 Named Executive Officers

 

Name

Position

 

 

EDWARD H. BASTIAN

Chief Executive Officer

 

 

GLEN W. HAUENSTEIN

President

 

 

PETER W. CARTER

Executive Vice President & Chief Legal Officer and Corporate Secretary

 

 

RAHUL D. SAMANT

Executive Vice President & Chief Information Officer

 

 

WILLIAM C. CARROLL

Senior Vice President & Interim Co-Chief Financial Officer

 

 

GARRETT L. CHASE

Senior Vice President & Interim Co-Chief Financial Officer

 

 

Effective November 15, 2020, Paul A. Jacobson resigned as Chief Financial Officer and Mr. Carroll and Mr. Chase became Interim Co-Chief Financial Officers as of November 16, 2020. Effective October 2, 2020, W. Gil West retired as Senior Executive Vice President & Chief Operating Officer.

EXECUTIVE SUMMARY

Delta began 2020 with high expectations: gearing to exceed the record-breaking $1.6 billion payout made to our employees under the Profit Sharing Program for 2019, launching our commitment to becoming the world’s first carbon neutral airline and unveiling technological innovations to transform the air travel experience at CES 2020. Instead, the company faced the greatest challenges in its history with the COVID-19 pandemic, the resulting global economic crisis and the global call for racial equity and social justice, which has greatly affected our employees, customers, communities and shareholders. In the face of these challenges, the company quickly pivoted from our initial 2020 Flight Plan and focused on three key priorities:

Protecting the health and safety of our employees and our customers

Securing our liquidity position

Defining Delta’s recovery path

The actions we took to meet these priorities are described in detail in the “Letter from the CEO,” “Letter from the Non-Executive Chairman of the Board” and the “Proxy Statement Summary” sections of this proxy statement.

Our Employee Commitment

Shared Sacrifice

As Delta and the rest of the world navigated a new normal in 2020, one thing remained unchanged: our belief that Delta’s most important competitive advantage is our people. We were humbled by the dedication and determination of our people in response to the challenges Delta faced as a result of the COVID-19 pandemic. We will forever be grateful for the sacrifices our employees made to sustain the airline during these extraordinary times. By our people taking the following actions, we avoided involuntary furloughs of our U.S.-based employees:

Beginning April 1 and continuing for the remainder of 2020, a majority of hourly ground-based and merit employees’ scheduled work hours were reduced by 25 percent.

Over 50,000 employees volunteered to take unpaid leaves of absence ranging from 30 days to one year in duration.

Nearly 20 percent of our workforce (approximately 18,000 employees) participated in Delta’s enhanced early retirement and voluntary departure programs.

We have long known that our people and our culture are the foundations for the company’s success and the sacrifices they have made during this time are a true testament to the Delta difference. In return, we have supported our employees through this crisis in a variety of ways, as described below. We were also able to return all of our people to full schedules in 2021, despite running an operation that is still significantly reduced.

All Delta people were affected in numerous respects by the worst year in our history, including financially. As we analyzed the impact of the COVID-19 pandemic on our operation, we were also mindful of the impact on earned compensation for all employee groups and employment levels. In early 2021, we conducted a comprehensive pay review to ensure that the earned compensation of all our people in 2020 was comparable on a percentage basis so that the financial sacrifices experienced by our employees were shared equally.

 

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Diversity, Equity and Inclusion

Amid the global reckoning over racial inequality and injustice, we looked inward and strengthened our commitment to be an anti-racist and anti-discrimination organization that reflects the diversity of the communities we serve throughout the world. While Delta’s diversity, equity and inclusion efforts are not new, we accelerated these efforts in 2020 and committed to closing diversity gaps by increasing the representation of women and under-represented groups in senior leadership positions and doubling the number of Black officers and director-level employees by 2025. See “Our Commitment to Our People and Our Communities” on page 11 for more information about Delta’s diversity, equity and inclusion efforts.

The Personnel & Compensation Committee oversees the company’s progress in meeting these goals and includes diversity updates as a standing meeting agenda item. In addition to the Committee’s oversight responsibilities, members of the Board of Directors have actively engaged with employees to share their perspectives on this important topic. In October 2020, Committee member Kathy Waller and fellow Board member, Bill Easter participated in a virtual “Let’s Talk About It” session with Delta employees to share their views on the importance of prioritizing diversity, equity and inclusion as part of a successful business strategy and the role corporations play in driving societal change.

Talent Planning and Development

Talent planning and development are important at all levels within Delta—from the executive ranks to our frontline employees. The Personnel & Compensation Committee made this effort a high priority in 2020 and it will continue to be the highest priority in 2021. The Board of Directors is regularly updated on key talent indicators for our leaders, including recruiting and development programs. The Board members interact with potential future leaders through formal presentations and, prior to the pandemic, informal events.

 

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Executive Compensation in 2020

The Personnel & Compensation Committee traditionally performs its annual executive compensation review in February. Consistent with past years, it approved the annual and long-term incentive compensation plan design, including setting rigorous performance measures and goals, in early February 2020 prior to the onset of the COVID-19 pandemic. The Personnel & Compensation Committee monitored the impact of COVID-19 throughout the year, holding frequent meetings with company management and its compensation consultant. In addition to other actions taken by the Committee in 2020 as described in this Compensation Discussion and Analysis, the following executive compensation actions were taken in response to COVID-19:

Reduced Base Salaries. The Personnel & Compensation Committee supported Mr. Bastian’s request to forgo 100% of his base salary for nine months beginning April 1, 2020. In addition, all company officers, including the other named executive officers, took a 50% decrease in their base salaries for the same period.

No Annual Incentive Plan Payout. Because there would be no payouts under the Profit Sharing Program to our frontline employees for 2020, the Personnel & Compensation Committee and company management believed that no payments should be made to any management employee under our 2020 annual incentive plan. Therefore, at company management’s recommendation, the Committee exercised its discretion and eliminated payouts under the annual incentive plan, notwithstanding the attainment of certain performance measures.

No Changes to Outstanding Long-Term Incentive Awards. The effects of the pandemic impacted the performance measures included in our outstanding long-term incentive awards. Results for the performance award component of the 2018 long-term incentive program (LTIP) were certified at 100% of target but were trending at over 160% in early 2020 prior to the impact of COVID-19. Results for the 2019 and 2020 LTIPs are currently trending near or below target. The Personnel & Compensation Committee and company management discussed the merits of adjusting or resetting the performance measures or goals for the outstanding LTIPs to recognize that such plans were developed through the lens of Delta’s record financial performance over the three years prior to 2020 and did not reflect the current state of the airline. While acknowledging that the named executive officers would likely never realize the full value of their outstanding long-term incentive opportunities, the Committee ultimately determined not to modify any outstanding awards.

 

The CARES Act and Executive Compensation in 2021

In April 2020, Delta entered into an agreement with the U.S. Department of the Treasury to receive emergency support through the payroll support program under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which totaled $5.6 billion. In January and April 2021, Delta and the Treasury Department entered into additional payroll support program agreements under the Consolidated Appropriation Act, 2021 and the American Rescue Plan Act of 2021 (with the initial agreement, referred to as the PSP Agreements). Collectively, these additional agreements are expected to provide approximately $6.4 billion in payroll support payments. All of the payroll support funds must be used exclusively for the payment of employee wages, salaries and benefits and are conditioned Delta agreeing, among other things, to refrain from conducting involuntary employee layoffs or furloughs from the date of the agreement through dates specified in each agreement, the last of which is September 30, 2021 or the date on which Delta has expended all of the payroll support, whichever is later. In addition, Delta became subject to other restrictions, including certain limitations on executive compensation (CARES Act compensation limitations).

Under the CARES Act compensation limitations, the total compensation (as defined in the PSP Agreements) of our management employees whose total compensation exceeded $425,000 in 2019 is limited during any 12 consecutive month period beginning March 24, 2020 through April 1, 2023 (the end date under the third payroll support program) to the total compensation the employee received in 2019. Additionally, for those individuals whose total compensation exceeded $3 million in 2019, the total compensation is limited to (1) $3 million plus (2) 50% of the excess over $3 million. As explained earlier, the Personnel & Compensation Committee determined our named executive officers’ 2020 compensation in February 2020, before the CARES Act compensation limitations went into effect. Accordingly, the target award opportunities provided under the 2020 LTIP are not eligible for inclusion in the CARES Act compensation calculation and are not subject to the CARES Act compensation limitations.

Company management has designed processes to ensure compliance with the CARES Act compensation limitations. As of the date of this proxy statement, the total compensation provided to our named executive officers (and all other employees to which these limitations apply) for the 12-month period ending March 23, 2021, is within these limitations.

We are continuing with our current short-term and long-term incentive compensation plans for 2021. In February 2021, the Personnel & Compensation Committee approved annual target compensation levels for our named executive officers that are consistent with 2020 levels and within the CARES Act compensation limitations. The Committee believes that it has never been more important to motivate and retain our entire management team while they lead the company’s recovery efforts. Yet, it agreed, as in prior years and consistent with our pay for performance philosophy, that the substantial portion of the named executive officers’ 2021 compensation remain at risk—dependent on Delta’s achievement of its performance goals and stock price performance.

 

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Administration of the Executive Compensation Program

PERSONNEL & COMPENSATION COMMITTEE

The Personnel & Compensation Committee oversees and approves Delta’s executive compensation program to reinforce our culture by ensuring a strong connection between pay and performance as well as alignment between our executives, employees and shareholders. This includes:

 

Establishing Delta’s executive compensation philosophy and objectives in consultation with an independent compensation consultant and company management

Overseeing the development and implementation of our executive compensation program

Reviewing and approving the compensation structure and performance measures for our Chief Executive Officer and other executive officers

Evaluating the performance of the Chief Executive Officer in meeting corporate goals and objectives

Reviewing and advising the Board of Directors on management succession planning

Overseeing Delta’s policies and strategies relating to talent development and human capital management, including diversity, equity and inclusion

Making recommendations to the Board of Directors on the appointment of officers

Reviewing tally sheets, competitive market data for our peer group and individual contributions to establish target compensation for our executive officers

 

INDEPENDENT COMPENSATION CONSULTANT

In 2020, after considering the factors provided under the NYSE listing standards and Item 407(e)(3)(iii) of SEC Regulation S-K, the Personnel & Compensation Committee engaged Frederic W. Cook & Co., Inc. (FW Cook) as its independent executive compensation consultant. In this role, FW Cook provides advice to the Personnel & Compensation Committee and the Corporate Goverance Committee regarding Delta’s executive and director compensation programs. This includes:

 

Providing advice regarding Delta’s executive compensation program based on the company’s business strategy, compensation philosophy, prevailing market practices and relevant regulatory mandates

Providing annual recommendations directly to the Personnel & Compensation Committee on Chief Executive Officer compensation

Advising the Corporate Governance Committee on the compensation for the non-executive Chairman of the Board and non-employee directors

Providing advice on the Company’s compensation peer group

Updating and advising the Personnel & Compensation Committee on key executive compensation trends in the industry and general market

Attending, at the request of the Personnel & Compensation Committee, executive session discussions without the presence of company management

Periodically working directly with company management on behalf of and under the control and supervision of the Personnel & Compensation Committee

The Personnel & Compensation Committee considered FW Cook’s advice when determining executive compensation plan design and award levels in 2020.

 

DELTA MANAGEMENT

Delta’s management team provides input to the Personnel & Compensation Committee on Delta’s executive compensation program structure and, under the supervision of the Personnel & Compensation Committee, is responsible for the ongoing administration of the program. This includes:

 

Developing Flight Plan goals and providing input on business strategy and performance

Providing updates to the Personnel & Compensation Committee on key executive compensation trends in the industry and general market

Evaluating the financial and legal implications of executive compensation proposals and confirming proposed payouts to executive officers under our incentive compensation plans are calculated correctly and comply with plan terms

The Chief Executive Officer making recommendations for the compensation of executive officers other than himself, including determining compensation levels for the Interim Co-Chief Financial Officers

 

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Executive Compensation Philosophy and Objectives

Our executive compensation philosophy is to achieve Delta’s short-term and long-term business goals, which we refer to as our Flight Plan, by closely linking pay to performance and by aligning the interests of all Delta people with the interests of our customers and shareholders. Based on this philosophy, the Personnel & Compensation Committee develops the executive compensation program to promote a pay for performance culture that:

 

Pay for Performance

Pay for performance is the foundation of our compensation philosophy for all employees, driving a strong sense of team work and continual improvement of business results. Our executive compensation program places a substantial portion of total compensation at risk. In 2020, 94% of total target compensation for the Chief Executive Officer and 90% of total target compensation for the other named executive officers (excluding the Interim Co-Chief Financial Officers) was contingent on Delta achieving ambitious financial, operational and customer service goals or varied with stock price performance. Furthermore, the majority of their total compensation is paid in Delta stock, which, together with our stock ownership and retention guidelines, aligns the interests of management to the interest of shareholders.

The Personnel & Compensation Committee sets stretch performance goals under our annual and long-term incentive plans to drive Delta’s business strategy and to deliver value to our shareholders.

Our incentive plans closely align the interests of management with those of frontline employees in two respects. First, many of the same financial, operational and customer service performance measures are used in both our executive and broad-based employee compensation programs. Second, we have long structured both our annual and long-term incentive plans to ensure that executives do not receive their full incentive payouts unless our people also receive payment under the Profit Sharing Program for the year.

 

 

*

Excluding the Interim Co-Chief Financial Officers

Say on Pay Voting Results

At our 2020 annual meeting, we asked shareholders for a non-binding “say on pay” advisory vote to approve the 2019 compensation of the named executive officers. The holders of over 92% of the shares present and entitled to vote at the 2020 annual meeting voted for approval of the compensation of the named executive officers. The Personnel & Compensation Committee took these results into account by continuing to emphasize our pay for performance philosophy utilizing challenging performance measures that provide incentives to deliver value to our shareholders.

 

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Corporate Governance and Compensation Practices

Our executive compensation program reflects corporate governance policies and compensation practices that are transparent and consistent with best practices. The following chart highlights the policies and practices we consider instrumental in driving company performance while mitigating risk, as well as the practices we avoid:

 

What We Do:

Subject officers’ incentive compensation to compensation clawback provisions

Apply stock ownership and retention guidelines to executive officers and directors

Follow objective, standardized criteria for the timing of equity award grants

Include “double trigger” change in control provisions in our incentive awards

Prohibit hedging and pledging of company stock by our employees

Require a one-year minimum vesting period for performance-based awards under our equity compensation plan

Fully disclose our incentive plan performance measures

Engage with institutional investors regarding our executive compensation program

What We Don’t Do:

No employment contracts

No excise tax reimbursement for payments made in connection with a change in control

No repricing, cash buyouts or share recycling of stock options and stock appreciation rights under our equity compensation plan

No loss on sale for residence relocation protection for named executive officers

No supplemental executive retirement or deferred compensation plans

No company-provided:

personal club memberships

executive life insurance

home security

financial planning

Comparative Market Data and Peer Group

We believe peer group data should be used as a point of reference, not as the sole factor in our executive officers’ compensation. In general, the Personnel & Compensation Committee’s objective is for target total direct compensation opportunities to be competitive with the peer group, with individual variation based on the individual’s performance, experience and role within Delta.

Our peer group is composed of three major U.S. airlines and eighteen other companies in the hotel/leisure, transportation/ distribution, machinery/aerospace/defense and retail industries. We selected these industries because we believe it is important that our peer group have business characteristics that are similar to Delta’s, including revenue size, market capitalization, number of employees, operating margin and global presence. In order to retain and attract the talent we need, Delta must compete with these types of companies, and if the peer group was limited to the airline industry, we would have to include companies that are a fraction of the size and scope of Delta. The Personnel & Compensation Committee, in consultation with the compensation consultant and company management, reviews and considers changes to the composition of our peer group annually. There were no changes to the peer group in 2020. The companies in our peer group are:

 

 

 

 

Airlines:

American Airlines Group Inc.

Southwest Airlines Co.

United Airlines Holdings, Inc.

Hotel/Leisure:

Carnival Corporation

Marriott International, Inc.

 

Transportation/

Distribution:

The Coca-Cola Company

FedEx Corporation

Norfolk Southern Corporation

PepsiCo, Inc.

Sysco Corporation

Union Pacific Corporation

United Parcel Service, Inc.

Machinery/

Aerospace/Defense:

The Boeing Company

Honeywell International Inc.

L3Harris Technologies

Textron Inc.

Raytheon Technologies

Retail:

Best Buy Co., Inc.

The Home Depot, Inc.

Lowe’s Corporation

Target Corporation

 

  2021 PROXY STATEMENT 29

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Peer Group(1)

Revenue ($)(2)

Market Capitalization ($)(3)

International Operations as

Percentage of Revenue (%)(4)

75th Percentile

71,461

141,626

36

Median

39,268

78,610

20

25th Percentile

14,521

27,094

8

DELTA AIR LINES

17,095

25,539

22

Source: Standard & Poor’s Capital IQ

(1)

L3 Harris Technologies is excluded due to L3 Technologies merger with Harris Corporation.

(2)

Last 12 months from most recent quarter ended on or before December 31, 2020. In millions.

(3)

As of December 31, 2020. In millions.

(4)

As of the most recent fiscal year-end.

Elements of Compensation

Compensation elements for our executive officers include:

Type

Component

Objective

Fixed Compensation

Base Salary

Provides a fixed amount of compensation for performing day-to-day functions based on level of responsibility, experience and individual performance

Performance-Based Compensation

Annual Incentive Plan

Rewards short-term financial and operational performance on a relative and absolute basis using pre-established performance criteria that support the Flight Plan

 

Long-Term Incentive Program

Motivates management employees by linking incentives to our multi-year financial and customer service-related goals and rewarding long-term value creation measured by our stock price, free cash flow and return on capital

Aligns with interests of shareholders, facilitates executive officer stock ownership and encourages retention of our management employees

Benefits

Health, Welfare and Retirement Benefit Plans

Helps attract and retain highly qualified executives

 

Delta does not have a specific compensation target for each element of compensation. As shown in the compensation mix charts on page 28, at-risk compensation is the largest portion of the total compensation opportunity for the Chief Executive Officer and the other named executive officers. The Personnel & Compensation Committee believes this is the appropriate approach for aligning the interests of the named executive officers and shareholders.

The Personnel & Compensation Committee, and where relevant, the Chief Executive Officer, considers a number of factors, including competitive market data, internal equity, role and responsibilities, business and industry conditions, management succession planning and individual experience and performance in determining executive compensation. When making specific compensation decisions, the Personnel & Compensation Committee also reviews compensation “tally sheets” prepared by the compensation consultant. The tally sheets detail the total compensation and benefits for each executive officer, including the compensation and benefits the officer would receive under hypothetical termination of employment scenarios.

PERFORMANCE MEASURE SELECTION

Consistent with our executive compensation philosophy, the Personnel & Compensation Committee selects performance measures to support our Flight Plan and to closely align the interests of the named executive officers with the interests of our key stakeholders. Recognizing that the performance measures used under our annual and long-term incentive plans may need to change over time to reflect evolving priorities, the Personnel & Compensation Committee, together with company management and the compensation consultant, evaluates the performance measures used in our incentive plans each year to ensure they remain consistent with Delta’s long-term strategic plan and our annual Flight Plan goals.

To achieve our mission that no one better connects the world, the company’s pre-pandemic 2020 Flight Plan focused on four core pillars: our people, our customers, our partners and communities and our owners. With Delta’s culture as the foundation, our 2020 Flight Plan goals included being the airline of choice for customers, running the industry’s best operation, expanding Delta’s global network, delivering industry-leading financial results and investing for the future. The mix of absolute and relative performance measures included in our 2020 annual and long-term incentive plans are distinct and demonstrate how the Personnel & Compensation Committee incorporates the elements of our Flight Plan to drive performance.

We made changes to our annual and long-term incentive performance measures in 2017 to support a focus on positive revenue growth and global alliances. Given the positive momentum in these areas over the three years prior to 2020 and their

 

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continued focus for future years, the Personnel & Compensation Committee determined to retain the same performance measures under the annual incentive plan for 2020. The Committee, however, made two adjustments to the performance measures under the long-term incentive program.

To recognize Delta’s long-term commitment to deliver a combination of strong profit growth and capital efficiency, the Personnel & Compensation Committee introduced cumulative free cash flow as the long-term incentive program’s fourth performance measure, replacing relative total shareholder return. While no longer a core performance measure, relative total shareholder return was retained under the program as a modifier.

In setting the annual and long-term performance goals for each performance measure, the Personnel & Compensation Committee reviews our business plans and considers other factors, including our past variance to targeted performance, our historical performance, economic and industry conditions and the performance of other airlines. In certain cases, this analysis may cause the Committee to set lower targets than in previous years. We set challenging, but achievable goals, including those that are realizable only as a result of exceptional performance, for the company and the named executive officers to drive the achievement of our short- and long-term objectives.

Annual Incentive Plan

2020 Flight Plan Objectives

Performance Measure

Description

Deliver Industry-Leading
Financial Results

***

Our Culture is the Foundation

Absolute Financial — Pre-Tax Income

 

Based on business plan targets approved each year by the Board of Directors as part of Delta’s annual operating plan

Also serves as the measure used under the Profit Sharing Program, thereby aligning the interests of Delta management with our people

Run the Industry’s Best
Operation

***

Our Culture is the Foundation

***

Be the Airline of Choice for Customers

Operational Performance —

Delta and Delta Connection

Based on the broad-based Shared Rewards Program’s on-time arrival, baggage handling, flight completion and net promoter score goals, as well as on-time arrival and flight completion goals for our Delta Connection carriers

Satisfaction of these measures are determined based on achievement of either internal goals or first place performance relative to airline peers (other than net promoter scores)

Deliver Industry-Leading
Financial Results

***

Expand Delta’s Global Reach

Relative Financial — Annual Pre-Tax Income Margin

Compares our pre-tax income margin relative to our airline peers. The Personnel & Compensation Committee has determined that using pre-tax margin better evaluates the results of our equity investments in global airlines

 

Long-Term Incentive Program

2020 Flight Plan Objectives

Performance Measure/Modifier

Description

Deliver Industry-Leading
Financial Results

Total Revenue per Available Seat Mile (TRASM)

A unit revenue measure that includes revenue from our ancillary businesses and other revenue sources as well as passenger revenue

Encourages focus on developing distinctive approaches to achieving top-line revenue growth while emphasizing disciplined capacity growth and revenue management

Be the Airline of Choice for Customers

Customer Service Performance

Based on Delta’s domestic and international net promoter scores, this measure further emphasizes the importance of earning and maintaining customer preference and loyalty

Invest for the Future

Return on Invested Capital

Determined on an after-tax basis and calculated using gross (rather than net) debt, which discourages the holding of excess cash

Deliver Industry-Leading

Financial Results

Cumulative Free Cash Flow

 

Encourages focus on long-term revenue and margin growth and is a measure of our business resilience

Deliver Industry-Leading
Financial Results

Relative Total Shareholder

Return Modifier

Compares our long-term total shareholder return relative to all other S&P 500 member companies

 

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BASE SALARY

The base salaries of our Chief Executive Officer and our other named executive officers remain below the median of the peer group for their respective positions. None of our named executive officers received a salary increase in 2020.

As part of Delta’s efforts to preserve cash in recognition of the challenges facing Delta as a result of the COVID-19 pandemic, Mr. Bastian volunteered to forgo 100% of his base salary for nine months beginning April 1, 2020. In addition, the other named executive officers agreed to forgo 50% of their base salaries for the same period.

ANNUAL INCENTIVE

The 2020 Management Incentive Plan (2020 MIP) links pay and performance by providing management employees with a compensation opportunity based on Delta’s achievement of certain Flight Plan goals in 2020. The 2020 MIP also aligns the interests of Delta management and employees by using metrics that are consistent with the goals that drive payouts under Delta’s Profit Sharing and Shared Rewards Programs.

Typically, payments under the 2020 MIP are provided in cash, however, to provide further alignment between our executive officers and our people, the executive officers’ 2020 MIP awards are subject to the following conditions if there is no Profit Sharing Program payout to employees for the year:

The actual MIP award, if any, will be capped at the target award opportunity, even if Delta’s performance for operational and relative financial goals exceeds the target level.

Any awards earned by executive officers will be made in restricted stock that will not vest until there is a payment under the Profit Sharing Program or under certain termination of employment scenarios.

The following chart shows the performance measures for the named executive officers under the 2020 MIP.

 

(1)

This column reflects the percentage of the target award achieved after application of the performance measure weightings applicable to the named executive officers other than the Interim Co-Chief Financial Officers whose Relative Financial performance measure weighting is 15% (rather than 25%). The remaining 10% is allocated to them through a leadership effectiveness performance measure.

(2)

“Pre-tax income” as defined in Delta’s broad-based Profit Sharing Program, means Delta’s annual consolidated pre-tax income calculated in accordance with GAAP and as reported in Delta’s SEC filings, but excluding (a) asset write downs related to long-term assets; (b) gains or losses with respect to special, unusual, or nonrecurring items; and (c) expense accrued with respect to any employee profit sharing plan, program or similar arrangement.

(3)

For purposes of the 2020 MIP, the Industry Group consists of Alaska Airlines, American Airlines, JetBlue Airways, Southwest Airlines and United Airlines.

 

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The target award opportunities under the 2020 MIP are expressed as a percentage of each participant’s base salary earned during the year. The Committee determined the target award opportunities taking into consideration the peer group comparison, the Chief Executive Officer’s recommendations for executive officers other than himself and input from the compensation consultant. The 2019 target award opportunities were maintained for the named executive officers other than for Mr. Carter and Mr. Samant. Their 2020 MIP target opportunities were increased to 150% of base salary (from 125%) to recognize their increased responsibilities and focus on implementing the company’s strategic initiatives. The target cash compensation opportunities (base salary and MIP) for our named executive officers remain generally below the peer group median.

The Personnel & Compensation Committee was regularly updated on the company’s performance under the 2020 MIP throughout the year. It determined, after review and consultation with company management and the compensation consultant, that despite the negative impact of COVID-19 on the 2020 MIP, no changes or adjustments would be made to the performance measures approved in February 2020.

Due to the extraordinary efforts of our frontline employees, the only 2020 MIP performance measure that exceeded threshold level was operational performance. However, because there was no payout under the Profit Sharing Program for 2020, at company management’s recommendation, the Personnel & Compensation Committee exercised its discretion and eliminated any potential payouts for all 2020 MIP participants, including the named executive officers.

 

Named Executive Officer

Base Salary*

Target Award

(as % of base salary)

 

Target Award

Percentage of

Target Award Earned

 

Total 2020

MIP Award

Mr. Bastian

$

237,500

200%

$

475,000

0%

 

$

0

Mr. Hauenstein

$

437,500

175%

$

765,625

0%

 

$

0

Mr. Carter

$

343,750

150%

$

515,625

0%

 

$

0

Mr. Samant

$

343,750

150%

$

515,625

0%

 

$

0

Mr. Carroll

$

296,875

80%

$

237,500

0%

 

$

0

Mr. Chase

$

281,250

80%

$

225,000

0%

 

$

0

 

*

Reflects base salary reductions from April 1 through December 31, 2020

LONG-TERM INCENTIVES

2020 Long-Term Incentive Program

The 2020 Long-Term Incentive Program (2020 LTIP) links pay and performance by providing management employees with a compensation opportunity that aligns the interests of management and shareholders, with a large portion contingent upon Delta’s financial, customer service and stock price performance over a three-year period. The performance measures and goals are the same for the Chief Executive Officer, the other named executive officers and all other participants in this program.

The 2020 LTIP target awards are the largest component of each executive officer’s compensation opportunity. The Personnel & Compensation Committee determined the target award opportunities so each participant’s total direct compensation opportunity is competitive with the peer group. The 2019 target award levels for the named executive officers were maintained, except for Mr. Carter, Mr. Samant and Mr. Chase. Mr. Carter’s and Mr. Samant’s target award opportunities under the 2020 LTIP were increased in conjunction with the changes made to their target awards under the 2020 MIP to recognize their increased responsibilities and focus on implementing the company’s strategic initiatives. The increase in Mr. Chase’s target award opportunity was to reward his leadership in developing the company’s strategic partnerships.

The award allocations shown below were selected to balance the incentive opportunity between Delta’s financial performance relative to other airlines, internal company performance and stock price performance. This mix and the other terms of the 2020 LTIP are intended to balance the performance and retention incentives with the volatility of airline stocks.

 

 

 

*

Excluding the Interim Co-Chief Financial Officers

 

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Performance Awards

Performance awards are dollar-denominated long-term incentive opportunities payable in Delta stock to executive officers at or above the executive vice president level on the payment date and in cash to all other participants. The chart below shows the range of potential payments of the performance awards based on the 2020 LTIP’s four performance measures over the three-year period ending December 31, 2022, with payouts potentially increased or decreased based on the company’s relative total shareholder return performance. Any payouts under this award (which, after taking into account any increase under the modifier, cannot exceed 200 percent of target) will occur in 2023.

 

 

 

 

(1)

For purposes of the 2020 LTIP, the Industry Group consists of: Alaska Airlines, American Airlines, JetBlue Airways, Southwest Airlines and United Airlines.

 

Restricted Stock

The 2020 LTIP provides that restricted stock will vest in three equal installments on February 1, 2021, February 1, 2022, and February 1, 2023, subject to forfeiture in certain circumstances. Restricted stock is eligible for dividends, but dividends will not become payable until the restrictions on the underlying stock lapse. Further, because Delta is restricted from paying dividends under the CARES Act, any dividends that have accrued with respect to any outstanding restricted stock awards, including under the 2020 LTIP, will not be paid until these CARES Act restrictions lapse. The value of an individual’s restricted stock award will depend on the price of Delta stock when the award vests.

 

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Performance Stock Options

Stock options are inherently performance-based, as they provide realized value only if the stock price appreciates. Nevertheless, the Personnel & Compensation Committee included a performance hurdle based on employees receiving a payout under the Profit Sharing Program to further align our named executive officers’ interests with the interests of our people. The 2020 LTIP generally provides that the performance stock options will become exercisable on the vesting dates described in the chart below, subject to the achievement of the following performance measures:

Performance Measure

 

Vesting Dates

Employees receive a payout under the Profit Sharing Program for 2020

 13 of performance stock option award

February 1, 2021

 13 of performance stock option award

February 1, 2022

 

 13 of performance stock option award

February 1, 2023

If there is no Profit Sharing Program payout for 2020, but employees receive a payout under the Profit Sharing Program for 2021

23 of performance stock option award

February 1, 2022

1/3 of performance stock option award

February 1, 2023

Employees receive no Profit Sharing Program payout for either 2020 or 2021

The entire performance stock option award will be forfeited (even if employees receive a payout under the Profit Sharing Program for 2022).

 

Because our people did not receive a payout under the Profit Sharing Program for 2020, none of the named executive officers’ performance stock options under the 2020 LTIP have vested.

For additional information about the vesting and possible forfeiture of the 2020 LTIP awards, see “Post-Employment Compensation—Potential Post-Employment Benefits upon Termination or Change in Control—Long-Term Incentive Programs” on page 49.

 

The 2018 Long-Term Incentive Program Payouts

In 2018, the Personnel & Compensation Committee granted the named executive officers performance awards under the 2018 Long-Term Incentive Program (2018 LTIP). We reported these award opportunities in our 2019 proxy statement.

The performance awards were denominated in cash but paid in shares of Delta stock to the named executive officers, other than Mr. Carroll and Mr. Chase, whose performance awards were paid in cash. The payout of these award opportunities is based on the total revenue per available seat mile (TRASM) relative to the performance of an industry peer group, Delta’s customer service performance, return on invested capital and total shareholder return relative to all other S&P 500 companies over the three-year performance period ended December 31, 2020.

Summarized in the chart below are the performance results certified by the Personnel & Compensation Committee for the performance awards under the 2018 LTIP and the resulting percentage of target award opportunity earned:

 

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(1)

This column reflects the percentage of the target award earned after application of the performance measure weightings.

 

BENEFITS

Our named executive officers participate in the same ongoing retirement plans as our frontline employees, including a defined contribution plan and, for certain officers, a frozen defined benefit pension plan. We do not provide any supplemental executive retirement plans or deferred compensation plans. The named executive officers also receive the same health and welfare benefits provided to all Delta employees, except for basic life insurance coverage, which all other employees receive and our officers do not. In addition, Delta requires officers to regularly complete a comprehensive physical examination. Delta pays the cost of this examination. Every domestic full-time Delta employee is eligible for a free physical under the company’s health plans. Other than eligibility for flight benefits (for the executive officer, immediate family members and other designees and, in certain circumstances, the executive officer’s surviving spouse), Delta provides no perquisites to any of our officers. Delta provides certain flight benefits to all employees and eligible retirees and survivors. These benefits are a low-cost, highly valued tool for attracting and retaining talent and are consistent with industry practice. In February 2020, the Personnel & Compensation Committee approved an increase to certain flight benefit allowances for Mr. Bastian and Mr. Hauenstein, whose allowances had not been adjusted since 2008. See the Summary Compensation Table and the related footnotes beginning on page 40 for information regarding benefits received in 2020 by the named executive officers.

RETENTION PAYMENT

In recognition of the highly sought-after and transferable talents of our Chief Information Officer, and within the CARES Act compensation limitations, the Personnel & Compensation Committee approved a cash retention payment to Mr. Samant in the amount of $300,000. Under the terms of this payment, which he received in a lump sum in October 2020, Mr. Samant agreed to remain with the company until at least October 2022. In the event that he is terminated by the company for cause or resigns his employment without good reason (as those terms are defined in “Post-Employment Compensation — Potential Post-Employment Benefits upon Termination or Change in Control — Triggering Events” on page 51) prior to October 2022, he will be required to repay the company a prorated portion of the payment.

 

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Risk Assessment

The Personnel & Compensation Committee requested FW Cook conduct a risk assessment of Delta’s executive compensation program. Based on this review, FW Cook determined that the executive compensation program does not encourage unnecessary risk-taking, and the Personnel & Compensation Committee and company management agree with this assessment. The Personnel & Compensation Committee notes the executive compensation program includes: (1) a compensation clawback policy for officers; (2) stock ownership and retention guidelines for executive officers; (3) incentive compensation capped at specified levels; (4) an emphasis on longer-term compensation; (5) use of multiple performance measures, both annual and long-term; and (6) an anti-hedging and anti-pledging policy for all employees. These features are designed to align the interests of executives with preserving and enhancing shareholder value.

Executive Compensation Policies

The Personnel & Compensation Committee monitors the continuing dialogue among corporate governance experts, securities regulators and related parties regarding best practices for executive compensation. Delta’s executive compensation policies, described below, are consistent with our executive compensation philosophy, align with shareholder interests and foster responsible behavior.

CLAWBACK POLICY

The compensation clawback policy holds officers accountable in the event of wrongful conduct. Under this policy, if the Personnel & Compensation Committee determines an officer has engaged in fraud or misconduct that requires a restatement of Delta’s financial statements, the Personnel & Compensation Committee may recover all incentive compensation awarded to or earned by the officer for fiscal periods materially affected by the restatement. For this purpose, incentive compensation includes annual and long-term incentive awards and all forms of equity compensation.

STOCK OWNERSHIP GUIDELINES

Under Delta’s stock ownership guidelines, executive officers are required to own shares of Delta stock as indicated in the following table:

 

Shares Equal to a

Multiple of Base Salary

OR

Shares

Chief Executive Officer

8x

 

400,000

President/Senior Executive Vice President

6x

 

200,000

Executive Vice Presidents

4x

 

150,000

Interim Co-Chief Financial Officers

4x

 

75,000

 

 

 

Executive officers must achieve the applicable ownership level within five years of the date they become subject to the guidelines. Each executive officer must hold at least 50% of all net shares received through restricted stock vesting or realized through stock option exercises until the applicable stock ownership guideline is achieved. For this purpose, “net shares” means all shares retained after applicable withholding of any shares for tax purposes. Stock ownership does not include shares an executive officer has the right to acquire through the exercise of stock options. The stock ownership of our executive officers is measured based on the three-month average of the closing price of Delta stock on the NYSE. As of December 31, 2020, all of our named executive officers exceeded their required stock ownership level, except Mr. Samant and the Interim Co-Chief Financial Officers, who first became subject to these guidelines in January 2018 and November 2020, respectively.

EQUITY AWARD GRANT POLICY 

Delta’s equity award grant policy provides objective, standardized criteria for the timing, practices and procedures used in granting equity awards. Under this policy, the Personnel & Compensation Committee will consider approval of annual equity awards for management employees in the first quarter of the calendar year. Once approved, the grant date of these awards will be the later of (1) the date the Personnel & Compensation Committee approves the awards and (2) the third business day following the date on which Delta publicly announces its financial results for the most recently completed fiscal year. Equity awards for new hires, promotions or other off-cycle grants may be approved as appropriate and, once approved, these awards will be made on the later of (1) the date on which the grant is approved and (2) the third business day following the date on which Delta publicly announces its quarterly or annual financial results if this date is in the same month as the grant.

ANTI-HEDGING AND ANTI-PLEDGING POLICY

Under Delta’s insider trading policy, employees and Board members are prohibited from engaging in transactions in Delta securities involving publicly traded options, short sales and hedging transactions because they may create the appearance of unlawful insider trading and, in certain circumstances, present a conflict of interest. In addition, employees and Board members are prohibited from holding Delta securities in a margin account or otherwise pledging Delta securities as collateral for a loan.

 

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Compensation for Mr. Bastian

The Personnel & Compensation Committee evaluates Mr. Bastian’s performance and makes compensation decisions based on his delivery of the Flight Plan and his progress toward meeting Delta’s long-term business strategies. As previously explained, the annual review of Mr. Bastian’s compensation for 2020 was conducted in February before the onset of the COVID-19 pandemic and following a year in which Mr. Bastian led Delta to record financial results, industry-leading operational reliability and continued improvements in customer satisfaction.

Despite the company’s successful 2019, recognizing that it increased Mr. Bastian’s base salary and his long-term incentive target award opportunities in 2018 and 2019, the Personnel & Compensation Committee made no changes to Mr. Bastian’s compensation in 2020. In accordance with our executive compensation philosophy and to continue the alignment of the interests of Mr. Bastian and our shareholders, the vast majority of Mr. Bastian’s compensation opportunity continues to be at risk and dependent on company and stock price performance. The reality of this risk was demonstrated in 2020, when, by the end of year, the value of the Mr. Bastian’s 2020 LTIP award decreased significantly from its grant date fair value, as shown on the “Supplemental Compensation Table for 2020” on page 39. In addition, Mr. Bastian did not receive his base salary for nine months beginning April 1, 2020.

As the following graphs illustrate, a substantial percentage of Mr. Bastian’s compensation is at-risk and concentrated in equity-based awards.

 

 

See the Summary Compensation Table and the related footnotes beginning on page 40 for additional information about Mr. Bastian’s compensation.

Post-Employment Compensation

Our executive officers do not have employment contracts, supplemental executive retirement plans, deferred compensation plans or change in control agreements. They are eligible to receive certain benefits in the event of specified terminations of employment, including as a consequence of a change in control. The Personnel & Compensation Committee believes these provisions strengthen the alignment of the executives’ compensation with future company performance. The severance benefits and the forfeiture provisions under our long-term incentive programs for the named executive officers are described in “Post-Employment Compensation — Potential Post-Employment Benefits upon Termination or Change in Control” beginning on page 49.

Tax and Accounting Impact and Policy

The financial and tax consequences to Delta of the executive compensation program are important considerations for the Personnel & Compensation Committee when analyzing the overall design and mix of compensation. The Personnel & Compensation Committee seeks to balance an effective compensation program with an appropriate impact on reported earnings and other financial measures.

Internal Revenue Code Section 162(m) limits deductions for certain compensation to any covered executive to $1 million per year, including performance-based compensation (except in the case of certain arrangements in place as of November 2, 2017). Prior to 2018, this limitation did not apply to compensation that met the tax code requirements for qualifying performance-based compensation. The elimination of the performance-based exception has not altered the Personnel & Compensation Committee’s commitment in this area because pay for performance is a foundational principle of our executive compensation philosophy.

Equity awards granted under our executive compensation program are expensed in accordance with Statement of Financial Accounting Standards Codification Topic 718, Stock Compensation.

 

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Supplemental Compensation Table for 2020

This Supplemental Compensation Table has been included to illustrate how the impact of COVID-19 on Delta’s business affected the value of the 2020 LTIP awards granted to our named executive officers on February 5, 2020, prior to the onset of the pandemic. As previously discussed, the Personnel & Compensation Committee declined to adjust the 2020 LTIP awards despite the likelihood that the officers may never receive their intended value. This supplemental information shows the significant decrease in the value of those awards as of December 31, 2020 for our named executive officers (excluding the Interim Co-Chief Financial Officers) and when compared, as applicable, to their total compensation for 2019.

For ease of reference, the columns that differ from the 2020 amounts in the Summary Compensation Table are highlighted. This supplemental table is not, however, intended to be a substitute for the information provided in the Summary Compensation Table on page 40, which has been prepared in accordance with applicable SEC rules.

Name

Salary

($)

Bonus

($)

Stock

Awards

($)(1)(2)(3)

Option

Awards

($)(1)(4)

Non-Equity

Incentive Plan

Compensation

($)

Change in Pension

Value

($)

 

 

All Other

Compensation

($)

Total

($)

Decrease in

Value vs.

2019 (%)(5)

Edward H. Bastian

Chief Executive Officer

237,500

-

4,941,711

-

-

17,726

378,487

5,575,424

-67.8

Glen W. Hauenstein

President

437,500

-

2,688,644

-

-

-

267,253

3,373,397

-66.2

Peter W. Carter

Executive Vice President & Chief Legal Officer

343,750

-

1,372,291

-

-

-

174,086

1,890,127

-62.5

Rahul D. Samant

Executive Vice President & Chief Information Officer

343,750

300,000

1,327,959

-

-

-

146,583

2,118,291

N/A

 

(1)

The Stock Awards column represents the combined value of the performance award and restricted stock components of the 2020 LTIP. The Option Awards column represents the value of the performance stock option component of the 2020 LTIP.

(2)

The value of the 2020 LTIP performance awards is computed based on the probable outcome of the applicable performance conditions. As of December 31, 2020, the probable outcome of the (i) cumulative free cash flow and return on invested capital performance measures is below the threshold level; (ii) the relative TRASM and customer service performance measures is at the target level; and (iii) the relative TSR modifier would result in no adjustment. Accordingly, the value of the performance awards are calculated based on a total probable outcome of threshold level performance (50%). For purposes of the Summary Compensation Table, the value of the performance awards is based on the probable outcome of the performance conditions on the February 5, 2020 grant date, which, at that time, was based on target level performance (100%).

(3)

The value of the 2020 LTIP restricted stock awards is based on the $40.21 closing price of Delta common stock on December 31, 2020. For purposes of the Summary Compensation Table, the value of the restricted stock is based on the $58.89 closing price of Delta common stock on the February 5, 2020 grant date.

(4)

The value of the 2020 LTIP performance stock options is based on their intrinsic value as of December 31, 2020, which is zero (the options are underwater based on their $58.89 exercise price and the $40.21 stock price on December 31, 2020). Further, because the performance condition (payment under the Profit Sharing Program for 2020 or 2021) was not met in 2020, these awards did not vest and will be forfeited in their entirety if there is no payment under the Profit Sharing Program for 2021. For purposes of the Summary Compensation Table, the value of the performance stock options is determined under an option pricing model on the February 5, 2020 grant date, assuming the performance condition would be achieved.

(5)

This column represents the percentage decrease of each named executive officer’s total compensation as shown in this supplemental table compared to his total 2019 compensation disclosed in the Summary Compensation Table, excluding Mr. Samant who was not a named executive officer in 2019.

Compensation Committee Report

The Personnel & Compensation Committee has reviewed and discussed with Delta management the Compensation Discussion and Analysis and, based on such review and discussion, the Personnel & Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

THE PERSONNEL & COMPENSATION COMMITTEE

Sergio A. L. Rial, Chair
Francis S. Blake
Jeanne P. Jackson
George N. Mattson
David S. Taylor
Kathy N. Waller

 

  2021 PROXY STATEMENT 39

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Executive Compensation Tables

The table below contains information about the compensation of the following named executive officers during 2020: (1) Mr. Bastian, Delta’s principal executive officer; (2) Mr. Carroll and Mr. Chase, Delta’s principal financial officers effective November 16, 2020; (3) Mr. Hauenstein, Mr. Carter and Mr. Samant, who were Delta’s three other most highly compensated executive officers on December 31, 2020; (4) Mr. Jacobson, who served as Delta’s principal financial officer until November 14, 2020; and (5) Mr. West, who would have been among Delta’s three other most highly compensated executive officers on December 31, 2020, if he had been an executive officer on that date.

The Personnel & Compensation Committee approved the named executive officers’ long-term incentive compensation opportunities in February 2020, prior to the outset of the COVID-19 pandemic. As required by applicable regulations, the amounts shown in the “Stock Awards” and “Options Awards” columns below for 2020 are based on the value of those awards on February 5, 2020, the award’s grant date. See the “Supplemental Compensation Table for 2020” section of this proxy statement on page 39, which illustrates the significant decrease in the value of the 2020 long-term incentive compensation opportunities as of December 31, 2020.

Summary Compensation Table

Name

Year

Salary

($)

Bonus

($)

Stock

Awards

($)(1)(2)(3)

Option

Awards

($)(1)(4)

Non-Equity

Incentive Plan

Compensation

($)(5)

Change in Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)(6)

All Other

Compensation

($)(7)

 

Total

($)(8)(11)

Edward H. Bastian

Chief Executive Officer

2020

237,500

-

8,375,245

4,125,054

-

17,726

378,487

 

13,134,012

2019

945,833

-

8,375,463

4,125,096

3,516,987

33,393

328,606

 

17,325,379

2018

891,667

-

7,705,118

3,795,014

2,277,090

-

313,559

 

14,982,448

Glen W. Hauenstein

President

2020

437,500

-

4,522,809

2,227,547

-

-

267,253

 

7,455,109

2019

700,000

-

4,522,932

2,227,509

2,227,520

-

239,872

 

9,967,833

2018

693,750

-

4,020,040

1,980,072

1,549,686

-

220,252

 

8,463,800

Peter W. Carter

Executive Vice President & Chief Legal Officer

2020

343,750

-

2,325,177

775,037

-

-

174,086

 

3,618,050

2019

550,000

-

2,350,193

700,056

1,278,200

-

159,010

 

5,037,459

2018

545,833

-

1,912,657

637,529

869,722

-

151,433

 

4,117,174

Rahul D. Samant(9)

Executive Vice President & Chief Information Officer

2020

343,750

300,000

2,250,077

750,061

-

-

146,583

 

3,790,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William C. Carroll(10)

Senior Vice President & Interim Co-Chief Financial Officer

2020

296,875

-

850,475

150,079

-

-

114,539

 

1,411,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Garrett L. Chase(10)

Senior Vice President & Interim Co-Chief Financial Officer

2020

281,250

-

850,475

150,079

-

-

87,942

 

1,369,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paul A. Jacobson

Former Executive Vice President & Chief Financial Officer

2020

309,375

-

3,000,495

1,000,044

-

27,560

301,455

 

4,638,928

2019

550,000

-

3,000,236

1,000,033

1,533,840

29,327

169,716

 

6,283,152

2018

547,917

-

3,000,035

1,000,048

1,043,666

-

158,317

 

5,749,983

W. Gil West

Former Senior Executive Vice President & Chief Operating Officer

2020

351,326

-

4,522,809

2,227,547

-

-

393,774

 

7,495,455

2019

700,000

-

4,522,932

2,227,509

2,227,520

-

208,756

 

9,936,717

2018

693,750

-

4,020,040

1,980,072

1,549,686

-

198,813

 

8,442,361

 

  2021 PROXY STATEMENT 40

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(1)

The amounts in the “Stock Awards” and “Option Awards” columns do not represent amounts the named executive officers received or are entitled to receive. Rather, the reported amounts represent the aggregate fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (FASB ASC Topic 718), on the applicable grant date or, if earlier, the service inception date. The reported amounts do not reflect the risk the stock awards may be forfeited in certain circumstances; for awards subject to performance conditions, the risk there is no payout; or in the case of performance stock options, that there is no vesting because the performance conditions are not met. The fair value of restricted stock awards is based on the closing price of Delta common stock on the grant date.

The reported amounts for 2020, 2019 and 2018 in the “Stock Awards” column reflect award opportunities under Delta’s long-term incentive programs. For additional information, see footnotes 2 and 3 below.

(2)

The 2020 Long-Term Incentive Program (2020 LTIP) provides our executive officers with a long-term incentive opportunity consisting of performance awards, performance stock options and restricted stock. The performance awards under the 2020 LTIP are denominated in dollars. The payouts, if any, earned by a named executive officer who is an executive vice president or more senior officer on the payment date will be made in stock (and in cash for all other participants) based on the achievement of pre-established performance measures over a three-year performance period. The restricted stock granted under the 2020 LTIP will vest in three equal installments on February 1, 2021, 2022 and 2023, subject to forfeiture in certain circumstances. See “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentives” on page 33 for details about the 2020 LTIP.

The reported amounts for 2020 in the “Stock Awards” column include the fair value of the performance awards and restricted stock under the 2020 LTIP, computed in accordance with FASB ASC Topic 718 on February 5, 2020, the date the 2020 LTIP awards became effective.

See footnote 4 below for additional information regarding the performance stock options.

(3) 

For awards in the “Stock Awards” column that are subject to performance conditions, the fair value is computed in accordance with FASB ASC Topic 718 based on the probable outcome of the performance condition as of the applicable grant date or, if earlier, the service inception date. For these purposes, the fair value of the performance awards under the 2020 LTIP is computed based on performance at the target level.

If the performance awards were assumed to pay out at the maximum level, the aggregate fair value of such awards, which does not include the restricted stock or performance stock option component of the 2020 LTIP, for the named executive officers would be as follows:

Name

2020 ($)

Edward H. Bastian

8,500,000

Glen W. Hauenstein

4,590,000

Peter W. Carter

2,356,000

Rahul D. Samant

2,280,000

William C. Carroll

860,000

Garrett L. Chase

860,000

Paul A. Jacobson

3,040,000

W. Gil West

4,590,000

 

(4) 

The stock options granted under the 2020 LTIP are subject to performance conditions. We determined the grant date fair value of stock options based on achievement of the target level under an option pricing model using the following assumptions: (i) a 1.47% risk-free interest rate, (ii) a 27% expected volatility of common stock, (iii) a 2.7% expected dividend yield and (iv) a 5.2 year expected life.

(5) 

Because our employees did not receive a payout under the Profit Sharing Program for 2020, at company management’s recommendation, the Personnel & Compensation Committee exercised its discretion to eliminate payouts under the 2020 Management Incentive Plan (MIP). See “Compensation Discussion and Analysis — Elements of Compensation — Annual Incentive” on page 32 for details about the 2020 MIP.

(6) 

The reported amounts for 2020 reflect the aggregate change in the actuarial present value for Mr. Bastian’s and Mr. Jacobson’s accumulated benefits under the frozen Delta Retirement Plan measured from December 31, 2019 to December 31, 2020. The other named executive officers are not participants in this plan. See “Post-Employment Compensation — Defined Benefit Pension Benefits” on page 48 for a description of this plan, including its eligibility requirements.

(7) 

The reported amounts of all other compensation for 2020 include the following items:

Name

Contributions to

Qualified Defined

Contribution Plan

($)(a)

Payment due to

IRS limits to

Qualified Plan

($)(b)

 

Reimbursement of

Taxes

($)(c)

 

Perquisites and

Other Benefits

($)(d)

Post-Employment

Payments

($)(e)

Edward H. Bastian

25,650

312,254

19,084

21,499

-

Glen W. Hauenstein

25,650

218,702

7,476

15,426

-

Peter W. Carter

25,650

120,326

10,433

17,678

-

Rahul D. Samant

25,650

119,454

1,479

 

-

William C. Carroll

25,650

63,969

8,174

16,746

-

Garrett L. Chase

25,650

59,253

3,040

 

-

Paul A. Jacobson

25,650

150,924

6,161

 

118,720

W. Gil West

25,650

223,756

2,044

 

142,325

(a) 

Represents Delta’s contributions to the Delta 401(k) Retirement Plan, a broad-based tax qualified defined contribution plan, based on the same fixed and matching contribution formula applicable to all participants in this plan.

(b) 

Represents amounts paid directly to the named executive officer that Delta would have contributed to the officer’s account under the Delta 401(k) Retirement Plan absent limits applicable to such plans under the Internal Revenue Code. These payments are based on the same fixed and matching contribution formula applicable to all participants in this plan and are available to any plan participant affected by such limits.

(c) 

Represents tax reimbursements for flight benefits as described below.

 

  2021 PROXY STATEMENT 41

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(d) 

The amounts consist of an annual physical examination for officers and flight benefits as described below. Mr. Samant, Mr. Chase, Mr. Jacobson and Mr. West did not receive perquisites or other personal benefits with a total incremental cost of $10,000 or more, the threshold for reporting under SEC rules. From time to time, the named executive officers attend events sponsored by Delta at no incremental cost to Delta.

As is common in the airline industry, Delta provides complimentary travel and certain Delta Sky Club® privileges for named executive officers; the officer’s spouse, domestic partner or designated companion; the officer’s children and parents; and, to a limited extent, other persons designated by the officer. Complimentary travel for such other persons is limited to an aggregate imputed value of $35,000 per year for the Chief Executive Officer, President and Senior Executive Vice President, $15,000 per year for Executive Vice Presidents and $12,500 per year for Senior Vice Presidents. Delta reimburses the officer for associated taxes on complimentary travel with an imputed tax value of up to $40,000 per year for the Chief Executive Officer, President and Senior Executive Vice President, $20,000 per year for Executive Vice Presidents and $17,500 per year for Senior Vice Presidents. Unused portions of the annual allowances described in the previous two sentences accumulate and may be carried into succeeding years during employment. Complimentary travel is provided to the surviving spouse or domestic partner of eligible officers after the eligible officer’s death. Delta will not reimburse surviving spouses or domestic partners for associated taxes on complimentary travel under the survivor travel benefit. Delta’s incremental cost of providing flight benefits includes incremental fuel expense and the incremental cost on a flight segment basis for customer service expenses such as meals, onboard expenses, baggage handling, insurance, airport security and aircraft cleaning. Until January 2020, certain named executive officers were eligible to purchase private jet flights from a Delta subsidiary by paying the incremental cost of the flights. In addition, certain named executive officers have flight benefits on another airline at no incremental cost to the officers or Delta.

(e) 

Represents amounts paid to Mr. Jacobson and Mr. West under Delta’s standard vacation and paid time off policy for all terminated and retired employees. In connection with (i) Mr. Jacobson’s resignation from Delta on November 15, 2020, he was entitled to the payment of his earned but unused vacation and paid time off days and (ii) Mr. West’s retirement from Delta on October 2, 2020, he was entitled to the payment of his accrued but unused vacation and paid time off days.

(8) 

As required by SEC rules, the amount in the “Total” column for each named executive officer represents the sum of the amounts in all the other columns. As discussed in footnote (1) above, the amounts in the “Stock Awards” and “Option Awards” columns do not represent amounts the named executive officers received or are entitled to receive. Rather, these amounts represent the aggregate fair value of awards computed in accordance with FASB ASC Topic 718 on the applicable grant date or, if earlier, the service inception date. The amounts do not reflect the risk the awards may be forfeited in certain circumstances, for awards subject to performance conditions, the risk there is no payout or in the case of performance stock options, there is no vesting, because the performance conditions are not met.

(9) 

Mr. Samant was not a named executive officer in 2018 or 2019. His cash compensation includes a retention payment made to him in October 2020, which will be repayable by him on a prorated basis if his employment is terminated by Delta with cause or by him without good reason before October 1, 2022 (as such terms are defined in “Post-Employment Compensation — Potential Post-Employment Benefits upon Termination or Change in Control” on page 49).

(10) 

Mr. Carroll and Mr. Chase became Interim Co-Chief Financial Officers on November 16, 2020, and were not named executive officers in 2018 or 2019.

(11)

Beginning in March 2020, each of the named executive officers became subject to certain CARES Act compensation limitations. The amounts shown in the “Stock Awards” and “Option Awards” columns were granted in February 2020. Accordingly, these amounts are not eligible for inclusion in the CARES Act compensation calculation and are not subject to the CARES Act compensation limitations. As of the date of this proxy statement, the total compensation provided to each of the named executive officers (and all other employees to which these limitations apply) for the 12-month period ending March 2021 is within the CARES Act compensation limitations. See “Compensation Discussion and Analysis — Executive Summary — The CARES Act and Executive Compensation in 2021” on page 26 for details about these compensation limitations.

 

 

 

  2021 PROXY STATEMENT 42

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Grants of Plan-Based Awards Table

The following table provides information about annual and long-term award opportunities granted to the named executive officers during 2020 under the 2020 MIP and the 2020 LTIP. These award opportunities are described in the “Compensation Discussion and Analysis” section of this proxy statement under “Elements of Compensation — Annual Incentive” and “Elements of Compensation — Long-Term Incentives” beginning on page 33.

Name/Type of Award

Grant

Date(1)

Date of

Personnel &

Compensation

Committee

or Board

Action

Estimated Possible Payouts Under

Non-Equity Incentive Plan

Awards(2)

 

Estimated Future Payouts Under

Equity

Incentive Plan Awards(3)

All Other

Stock

Awards:

Number

of Shares

of Stock

or Units

(#)(4)

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)(5)

Exercise

or Base

Price of

Option

Awards

($/Sh)(6)

 

Threshold

($)

Target

($)

Maximum

($)

Threshold

($)

Target

($)

Maximum

($)

Grant Date

Fair Value

of Stock

and Option

Awards

($)(7)

Edward H. Bastian

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

950,000

1,900,000

3,800,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

2,125,000

4,250,000

8,500,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

70,050

 

 

4,125,245

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

369,960

58.89

4,125,054

Glen W. Hauenstein

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

612,500

1,225,000

2,450,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

1,147,500

2,295,000

4,590,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

37,830

 

 

2,227,809

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

199,780

58.89

2,227,547

Peter W. Carter

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

412,500

825,000

1,650,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

589,000

1,178,000

2,356,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

19,480

 

 

1,147,177

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

69,510

58.89

775,037

Rahul D. Samant

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

412,500

825,000

1,650,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

570,000

1,140,000

2,280,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

18,850

 

 

1,110,077

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

67,270

58.89

750,061

William C. Carroll

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

190,000

380,000

760,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

215,000

430,000

860,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

7,140

 

 

420,475

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

13,460

58.89

150,079

Garrett L. Chase

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

180,000

360,000

720,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

215,000

430,000

860,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

7,140

 

 

420,475

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

13,460

58.89

150,079

Paul A. Jacobson

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

412,500

825,000

1,650,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

760,000

1,520,000

3,040,000

 

 

 

 

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

25,140

 

 

1,480,495

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

89,690

58.89

1,000,044

W. Gil West

 

 

 

 

 

 

 

 

 

 

 

 

 

2020 MIP

1/1/2020

12/4/2019

612,500

1,225,000

2,450,000

 

 

 

 

 

 

 

 

2020 LTIP - Performance Award

2/5/2020

2/5/2020

 

 

 

 

1,147,500

2,295,000

4,590,000

 

 

 

 

 

  2021 PROXY STATEMENT 43

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Name/Type of Award

Grant

Date(1)

Date of

Personnel &

Compensation

Committee

or Board

Action

Estimated Possible Payouts Under

Non-Equity Incentive Plan

Awards(2)

 

Estimated Future Payouts Under

Equity

Incentive Plan Awards(3)

All Other

Stock

Awards:

Number

of Shares

of Stock

or Units

(#)(4)

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)(5)

Exercise

or Base

Price of

Option

Awards

($/Sh)(6)

 

Threshold

($)

Target

($)

Maximum

($)

Threshold

($)

Target

($)

Maximum

($)

Grant Date

Fair Value

of Stock

and Option

Awards

($)(7)

2020 LTIP - Restricted Stock

2/5/2020

2/5/2020

 

 

 

 

 

 

 

37,830

 

 

2,227,809

2020 LTIP - Performance
Stock Options

2/5/2020

2/5/2020

 

 

 

 

 

 

 

 

199,780

58.89

2,227,547

(1) 

For purposes of this column, the grant date for the 2020 MIP is the date the performance period began. The grant date for the 2020 LTIP is the grant date or, if earlier, the service inception date determined under FASB ASC Topic 718.

(2) 

These columns show the annual award opportunities under the 2020 MIP. There were no payments made under this plan to any employees eligible to participate in the 2020 MIP, including the named executive officers. Because our employees did not receive a payout under the Profit Sharing Program for 2020, at company management’s recommendation, the Personnel & Compensation Committee exercised its discretion to eliminate payouts under the 2020 MIP. For additional information about the 2020 MIP, see the “Compensation Discussion and Analysis” section of this proxy statement under “Elements of Compensation — Annual Incentive” on page 32.

(3)

These columns show the long-term award opportunities under the performance award component of the 2020 LTIP. For additional information about the 2020 LTIP, see footnotes 2 and 3 to the Summary Compensation Table and the “Compensation Discussion and Analysis” section of this proxy statement under “Elements of Compensation — Long-Term Incentives” beginning on page 33.

(4) 

This column shows the restricted stock component of the 2020 LTIP.

(5) 

This column shows the performance stock option component of the 2020 LTIP. For additional information about the performance stock option component of the 2020 LTIP, see footnote 4 to the Summary Compensation Table.

(6) 

The exercise price is equal to the closing price of Delta common stock on the NYSE on the date of grant.

(7) 

The amounts in this column do not represent amounts the named executive officers received or are entitled to receive. Rather, the reported amounts represent the fair value of the awards computed in accordance with FASB ASC Topic 718 on the applicable grant date or, if earlier, the service inception date. For awards subject to performance conditions, the value shown is based on the probable outcome of the performance condition as of the applicable grant date or, if earlier, the service inception date. The amounts do not reflect the risk that the awards may be forfeited in certain circumstances or, in the case of performance awards, that there is no payout, or in the case of performance stock options, that there is no vesting, if the required performance measures are not met.

 

  2021 PROXY STATEMENT 44

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Outstanding Equity Awards at Fiscal Year-End Table

The following table provides information regarding the outstanding equity awards on December 31, 2020 for each of the named executive officers.

Name

Grant

Date (1)

Option Awards

 

Stock Awards

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#)

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

(#)

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)(2)

Option

Exercise

Price

($)(3)

Option

Expiration

Date

Number

of Shares

or Units

of Stock

That

Have Not

Vested

(#)(4)

Market

Value of

Shares or

Units of

Stock That

Have Not

Vested

($)(5)

Equity

Incentive

Plan Awards:

Number of

Unearned

Shares, Units

or Other

Rights That

Have Not

Vested (#)(6)

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other

Rights That

Have Not

Vested ($)

Edward H. Bastian

 

 

 

 

 

 

 

 

 

 

 

2018 LTIP - Restricted Stock

2/8/2018

-

-

-

-

-

 

24,693

992,906

-

-

2019 LTIP - Restricted Stock

2/6/2019

-

-

-

-

-

 

54,440

2,189,032

-

-

2020 LTIP - Restricted Stock

2/5/2020

-

-

-

-

-

 

70,050

2,816,711

-

-

2014 LTIP - Performance Stock Options

2/6/2014

71,840

-

-

30.89

2/5/2024

 

-

-

-

-

2015 LTIP - Performance Stock Options

2/5/2015

91,710

-

-

46.14

2/4/2025

 

-

-

-

-

2016 LTIP - Performance Stock Options

2/2/2016

173,230

-

-

43.61

2/1/2026

 

-

-

-

-

2017 LTIP Performance Stock Options

2/9/2017

206,510

-

-

49.33

2/8/2027

 

-

-

-

-

2018 LTIP Performance Stock Options

2/8/2018

204,694

102,346

-

51.23

2/7/2028

 

-

-

-

-

2019 LTIP Performance Stock Options

2/6/2019

127,200

254,400

-

50.52

2/5/2029

 

-

-

-

-

2020 LTIP Performance Stock Options

2/5/2020

-

-

369,960

58.89

2/4/2030

 

-

-

-

-

Glen W. Hauenstein

 

 

 

 

 

 

 

 

 

 

 

2018 LTIP - Restricted Stock

2/8/2018

-

-

-

-

-

 

12,883

518,025

-

-

2019 LTIP - Restricted Stock

2/6/2019

-

-

-

-

-

 

29,400

1,182,174

-

-

2020 LTIP - Restricted Stock

2/5/2020

-

-

-

-

-

 

37,830

1,521,144

-

-

2017 LTIP Performance Stock Options

2/9/2017

123,910

-

-

49.33

2/8/2027

 

-

-

-

-

2018 LTIP Performance Stock Options

2/8/2018

106,800

53,400