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The Honolulu Advertiser
Posted on: Friday, May 23, 2008

Aloha execs could find better use for bonuses

Even if special bonuses to executives are the norm in the corporate world, the swan song of the failed Aloha Airlines' executives strikes a sour note.

Under an arrangement approved by federal bankruptcy court, David Banmiller, the former chief executive officer, and Jeffrey Kessler, the erstwhile chief financial officer, could receive anywhere from $50,000 to $600,000 each for helping the airline sell off its assets, the amount depending on what the assets bring.

Such provisions, often called "retention bonuses" are common provisions in bankruptcy cases and are aimed at inducing essential executives to remain in their positions throughout the reorganization process so that assets can be liquidated or other elements of a corporation's end game can play out.

Changes in federal bankruptcy law passed in 2005 aimed to more tightly regulate such payouts. The bankruptcy court's approval of the Aloha deal legally established that the new rules are met.

But it's still disturbing when viewed against the backdrop of the death of an iconic presence in the Hawai'i corporate landscape. For thousands of employees, the closure of Aloha's passenger service demolished family financial stability and broke hearts.

Under those circumstances, it's unconscionable that top managers of a failed company be featherbedded by such a rich incentive when so many pilots, flight crews and other staffers have lost their livelihood.

It would be a reasonable compromise for Banmiller and Kessler to waive that part of their compensation and direct the money into a fund that could help jobless Aloha employees in some way, perhaps through a retraining program.

The changes in the law were aimed at being more restrictive about approving payouts for corporate insiders. The reaction to this one has been one of outrage from employees who are still suffering and who sacrificed greatly for a company that, at least in part because of mismanagement, ultimately failed.

The Aloha bonuses may be legal, but there should be a way to come up with a final chapter in this saga that's also fair.