ATLANTA — Delta Air Lines employees have about a month to turn in worthless stock options they hold for new ones that are much more likely to be valuable.
The Atlanta airline on Wednesday began an option exchange program that was approved last month at Delta's annual shareholders meeting.
Delta employees hold about 58 million stock options granted since 1996, but they are mostly worthless because the average exercise price is around $44. Delta stock currently trades around $13, so the options are deeply "under water."
Delta expects to end the offer by June 25 and to issue new options in late December. Those options will have exercise prices set at the stock's value at that time, making them valuable as long as the share price rises from that point.
The airline says about 45,000 employees are eligible. But top executives — who recently came under fire for bonuses and pension perks despite Delta's recent losses and stock slide — hold a disproportionate number of the worthless options.
Delta Chief Executive Leo Mullin is not eligible because he is on the board of directors, but the airline's other top four executives hold 1.9 million eligible options.
All told, management holds 21.1 million options, compared with 16.1 million for pilots and 21.3 million for other workers.
New options would be doled out at a rate of 1 per every 1.5 or 2 old options turned in by management; or 1 per every 3 old options turned in by other workers.
Delta says it proposed the new options as an incentive to keep people working at the airline, which lost $1.7 billion in the last five quarters and has shed about 16,000 jobs since late 2001.