LETTER 10
Subject: Northwest Airlines Profit Sharing Plan
Reference: Section 3 - Compensation
LETTER OF AGREEMENT
between
NORTHWEST AIRLINES, INC.
and
FLIGHT ATTENDANTS
in the service of
NORTHWEST AIRLINES, INC.
as represented by
ASSOCIATION OF FLIGHT ATTENDANTS - CWA, AFL-CIO
NORTHWEST AIRLINES PROFIT SHARING PLAN
THIS AGREEMENT is entered into by and between Northwest Airlines, Inc. a Minnesota
Corporation (the "Company") and the Flight Attendants in the service of Northwest Airlines,
Inc. as represented by the Association of Flight Attendants - CWA, AFL-CIO (the
"Union").
As part of an overall compensation plan for the Company's employees, the Company
hereby establishes an annual incentive compensation program to be known as the
"Northwest Airlines Profit Sharing Plan" (the "Plan"), as set forth herein. The Plan provides
for the awarding of annual payments to Participants based on the Company's achievement
of financial performance goals during each fiscal year commencing with fiscal year 2006.
The Plan shall be part of the Flight Attendants Agreement, become effective as of the
Effective Date of the Flight Attendants Agreement and its duration shall be concurrent with
such Agreement and subject to any status quo period thereafter.
The Company and the Union agree as follows:
I. DEFINITIONS
The following terms will be defined as set forth below for purposes of this Letter of
Agreement:
1.1 Annual Base Salary. The total remuneration paid to a Participant by
Northwest Airlines during any Plan Year, as reported on Treasury Form W-2
(or any comparable successor form), in Box 1 thereof.
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1.2 Aggregate Payout Amount. The amount determined under the provisions of
Section 4.1., below, for any Plan Year.
1.3 Award. The award paid to a Participant for a Plan Year, determined by
multiplying the Participant's Award Percentage for the Plan Year by the
Aggregate Payout Amount for the Plan Year.
1.4 Award Percentage. The percentage determined under the provisions of
Section 4.2., below.
1.5 Income. For any Plan Year, the Company's consolidated net income (taking
into account expenses accrued for payments due under the Plan but
excluding: (i) extraordinary, unusual or special items; (ii) restructuring gains
or losses; and (iii) gains and losses on the sale or disposition of assets or
equity investments; and including only that portion of the results of any
subsidiary equal to such subsidiary's results multiplied by the Company's
ownership percentage in such subsidiary, plus income taxes, minus
preferred stock requirements, as reported in the Company's Consolidated
Financial Statements.
1.6 Participant. An employee of Northwest Airlines who meets the eligibility
requirements in Section 3.1., below to participate in the Plan.
1.7 Pre-Tax Margin. Income as a percent of Revenue for any Plan Year, rounded
to two (2) decimal places.
1.8 Plan Year. Each of the Company's fiscal years, currently January 1 through
December 31, commencing with fiscal year 2006, occurring during the term
hereof.
1.9 Revenue. The Company's total revenues for any Plan Year, as reported in
the Company's Consolidated Financial Statements.
II. ADMINISTRATION
2.1 Administration. The Plan shall be administered by the Board of Directors of
Northwest Airlines (or a committee thereof).
2.2 Review of Calculation. The Company shall provide to each union whose
employees participate in this Plan, within seventy-five (75) calendar days
following the end of a Plan Year, the financial results of the Company for
such Plan Year and all information relevant to calculating the Pre-Tax Margin
and the Award amounts, if any.
2.3 Dispute Resolution. In the event of any dispute regarding the calculation of
the Pre-Tax Margin or the Award amounts or other administrative matters,
such dispute shall be subject to the grievance and System Board of
Adjustment procedures under the applicable collective bargaining
agreements.
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III. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Any Northwest Airlines employee represented by a union that has
agreed to participation by its members in the Plan and any Northwest
Airlines employee of a group, class or craft that the Company has designated
as eligible to participate in the Plan shall be eligible to participate in the Plan
with respect to a Plan Year if such employee was actively employed by
Northwest Airlines on the last day of the applicable Plan Year; provided,
however, if a Participant is eligible to receive an award under another
incentive program maintained by the Company during a Plan Year, such
Participant will be eligible to participate in the Plan during such Plan Year if
the amount of such Participant's Award is greater than the amount such
Participant would receive under such other incentive programs, in which
event such Participant would cease to be eligible to participate in such other
incentive program; provided, further, no salaried or management employee
who participates in another management incentive program shall be eligible
to participate in the Plan.
3.2 Partial Year Participation. Notwithstanding Section 3.1., above, if an
employee's employment with Northwest Airlines ceases as a result of
retirement, such an employee shall be eligible to be a Participant for the Plan
Year during which his or her retirement occurred.
IV. AWARD DETERMINATION
4.1 Aggregate Payout Amount.
(a) If the Company's Pre-Tax Margin for a Plan Year is less than or equal to
ten percent (10%), the Aggregate Payout Amount for such Plan Year
shall be equal to ten percent (10%) of Income for such Plan Year,
provided such amount is in excess of $1,000,000.00.
(b) If the Company's Pre-Tax Margin for a Plan Year is greater than ten
percent (10%), the Aggregate Payout Amount for such Plan Year shall be
equal to the sum of (i) ten percent (10%) of that portion of Income for
such Plan Year which portion would have resulted in the Pre-Tax Margin
being equal to ten percent (10%) (the "10% Margin Portion") and (ii)
fifteen percent (15%) of Income for such Plan Year in excess of the 10%
Margin Portion, provided the sum of (i) and (ii) is in excess of
$1,000,000.00.
(c) If the amount determined under (a) or (b) is less than $1,000,000.00,
the Aggregate Payment Amount shall be zero (0).
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4.2 Each Participant's Award for each Plan Year shall be determined as follows:
(a) The Award Percentage for each Participant for a Plan Year shall be equal
to the Participant’s Annual Base Salary for such Plan Year divided by the
aggregate amount of the Annual Base Salaries of all Participants for such
Plan Year, rounded to ten (10) decimal places.
(b) Once the Award Percentage for each Participant has been determined,
the Award Percentage for each Participant shall be multiplied by the
Aggregate Payout Amount for the Plan Year to determine the amount of
each Participant's Award for the Plan Year. All calculations with respect
to a Participant's Award shall be rounded to two (2) decimal places.
V. PAYMENT OF AWARDS
5.1 Form and Timing of Payment. Each Participant’s Award shall be paid in cash
in one lump sum no later than April 15 immediately following the end of the
Plan Year with respect to which the Award is paid.
5.2 Withholding Taxes. The Company shall deduct from all payments under the
Plan all applicable Federal, state or local payroll withholding taxes required
by law to be withheld with respect to such payments.
VI. MISCELLANEOUS
6.1 Amendments. The Plan may only be amended or modified for employees
represented by a union in a written agreement among such union,
Northwest Airlines and NWA Corp.
6.2 Governing Law. This Agreement and the Plan shall be governed by and
construed in accordance with the Railway Labor Act, and the internal laws of
the State of Minnesota without regard to the choice of law principles thereof.
6.3 No Employment Rights. The establishment of the Plan and participation in
the Plan shall not confer upon any Participant any right to continued
employment with Northwest Airlines, nor, subject to any applicable
agreement, shall it interfere in any way with the right of Northwest Airlines
to terminate the employment of any Participant at any time.
6.4 Unfunded Status of the Plan. The Plan is intended to constitute an
“unfunded” plan. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
6.5 Nontransferability. A Participant's interest in the Plan may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of by
any Participant and any such attempted violation of this Section 6.5 shall be
null and void and without effect.
Agreed to on this 18th day of June, 2007
FOR NORTHWEST AIRLINES, INC. FOR THE ASSOCIATION OF FLIGHT
ATTENDANTS – CWA, AFL-CIO
/s/ Julie Hagen Showers /s/ Patricia A. Friend
Vice President Labor Relations International President, AFA-CWA
/s/ Jay Hong
MEC President, AFA-CWA
/s/ Lovey Offerle
Negotiations Committee, AFA-CWA
/s/ James Yung
Negotiations Committee, AFA-CWA
/s/ David Barrow West
Negotiations Committee, AFA-CWA
/s/ Bruce Retrum
Negotiations Committee, AFA-CWA
/s/ Mark L. Littleton
Senior Staff Negotiator, AFA-CWA