2012 MANAGEMENT INCENTIVE PLAN by DELTA AIR LINES INC /DE/

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Company: DELTA AIR LINES INC /DE/
SEC CIK: 27904
SEC Type: EX-10.17
SIC Code: 4512
SIC Industry: AIR TRANSPORTATION, SCHEDULED
Date Filed: 2012-02-10

Date Filed: 
02/10/2012
SKU: RDUZ7D-C-7K-3
DAL 12.31.2011 EX 10.17
EXHIBIT 10.17

    



DELTA AIR LINES, INC.
2012 MANAGEMENT INCENTIVE PLAN

1.     Purpose. The 2012 Management Incentive Plan (the "MIP") is an annual incentive program sponsored by Delta Air Lines, Inc. ("Delta" or the "Company") that is intended to closely: (a) link pay and performance by providing management employees with a compensation opportunity based on Delta's achieving key business plan goals in 2012; and (b) align the interests of management employees with the Company's other employees and stakeholders. The MIP is being adopted under, and is subject to the terms of, the Delta Air Lines, Inc. 2007 Performance Compensation Plan (the "2007 Plan"). Capitalized terms that are used but not defined in the MIP shall have the meaning ascribed to them in the 2007 Plan.
2.     Plan Administration. (a) The Personnel & Compensation Committee of the Board of Directors (the "Committee") shall be responsible for the general administration and interpretation of the MIP and for carrying out its provisions. The Committee shall have such powers as may be necessary to discharge its duties hereunder, including, without limitation, the following powers and duties, but subject to the terms of the MIP:
(i)     authority to construe and interpret the terms of the MIP, and to determine eligibility, awards and the amount, manner and time of payment of any awards hereunder;
(ii)     authority to prescribe forms and procedures for purposes of MIP participation and distribution of awards;
(iii)     authority to adopt rules and regulations and to take such actions as it deems necessary or desirable for the proper administration of the MIP; and
(iv)    authority at any time prior to a Change in Control to eliminate or reduce the actual payout to any Participant in the MIP.
(b)     Any rule or decision by the Committee that is not inconsistent with the provisions of the MIP shall be conclusive and binding on all persons, and shall be given the maximum deference permitted by law.
(c)    Notwithstanding anything contained in the 2007 Plan to the contrary, the Committee shall not have the authority to increase the actual payout to any Participant in the MIP.
3.     Eligibility. All Delta employees worldwide who are officers, managing directors (grade 13), directors (grade 12), general managers (grade 11), grade 10 or grade 8 (other than employees who participate in a sales incentive plan) are eligible to participate in the MIP ("Participants").
4.     MIP Awards.

(a)     General. The MIP award (the "MIP Award") each Participant receives, if any, will be based on: (i) the Participant's Target MIP Award, as defined below; (ii) the level of achievement within each applicable performance measure; and (iii) the occurrence of a payout for 2012 under the Company's broad-based employee profit sharing program (the "Profit Sharing Program"), as described below. Certain additional requirements will apply to any Participant who is employed by the Company as an executive vice president or more senior officer or holds the position of general counsel or chief financial officer of the Company ("Executive Officer Participant"), as discussed in Section 7(b) below.

(b)         Performance Measures. The performance measures used will be one or more of financial ("Financial Performance"), operational ("Operational Performance"), revenue ("Revenue Performance"), leadership effectiveness ("Leadership Effectiveness Performance") and individual

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performance ("Individual Performance"). Achievement under each performance measure may range from below threshold, at which there is no payout, to the maximum performance level, at which the payout will be greater than the target level, subject to Section 4(c) below.

(c)     Interaction with Profit Sharing Program and Individual Performance Measure. If there is no payout under the Profit Sharing Program for 2012, (i) no amount will be paid with respect to Financial Performance to any Participant regardless of whether Delta meets or exceeds that performance measure and (ii) for general manager (grade 11) Participants and above, the actual MIP Award, if any, will not exceed such Participant's Target MIP Award (as defined below). In addition, if a Participant's performance under the Individual Performance Measure (applicable to Participants who are not officers) falls below the "meets expectations" performance rating, no amount will be paid with respect to Financial Performance, Operational Performance and/or Revenue Performance to such Participant regardless of whether Delta meets or exceeds those performance measures.

    (d)     Target MIP Awards. The Target MIP Award for each Participant will be expressed as a percentage of the Participant's Annual Base Salary (the "Target MIP Award") as determined by the Committee and will be communicated to Participants in such manner as the Committee deems appropriate. Subject to Section 8 below, "Annual Base Salary" means the Participant's 2012 annual base salary as in effect on December 31, 2012.
   
5.     Weighting of Performance Measures. Subject to Section 8 below, a percentage of each Participant's Target MIP Award is allocated to one or more of Financial Performance, Operational Performance, Revenue Performance, Leadership Effectiveness Performance and/or Individual Performance based on the Participant's employment level, as follows:

Performance Measures and Weighting

Employment
Level




(A)

% of Target MIP Award allocated to
Financial
Performance

(B)

% of Target MIP Award allocated to
Operational
Performance

(C)
% of Target MIP Award Allocated to Revenue Performance
(D)

% of Target MIP Award allocated to
Leadership Effectiveness
Performance
(E)

% of Target MIP Award allocated to
Individual
Performance

(F)
CEO
50%
25%
25%
0%
0%
President
50%
25%
25%
0%
0%
COO
50%
25%
25%
0%
0%
EVP
50%
25%
25%
0%
0%
CFO and General Counsel
50%
25%
25%
0%
0%
CIO
50%
25%
25%
0%
0%
SVP*
50%
25%
15%
10%
0%
VP*
50%
25%
15%
10%
0%
Managing Director (Grade 13)*
35%
15%
10%
0%
40%
Director (Grade 12)*
35%
15%
10%
0%
40%
General Manager (Grade 11)
25%
15%
10%
0%
50%
Grade 10
0%
0%
0%
0%
100%
 Grade 8
0%
0%
0%
0%
100%

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* Notwithstanding the weightings set forth above, the Committee has delegated to the Chief Executive Officer of the Company, the authority to reallocate up to an aggregate of (i) twenty percentage points for Senior Vice Presidents and Vice Presidents, and (ii) ten percentage points for Managing Directors and Directors, of the Target MIP Award allocated to Financial Performance to one or both of the Operational Performance and Revenue Performance weightings.
 
6.     The Performance Measures-Threshold, Target and Maximum Payout Levels. The Target MIP Award, and the amounts paid in connection with target levels of Financial, Operational, Revenue, Leadership Effectiveness, and Individual Performance, are based on the achievement of the target performance level with respect to each applicable performance measure (except that Financial Performance also requires a payout under the Profit Sharing Program for 2012). A Participant's actual MIP Award may be greater or less than the target amount based on whether performance under one or more of the performance measures applicable to the Participant exceeds or is below target performance, subject to Section 4(c) above. This is explained in more detail below.
(a)     Financial Performance Measures. The Financial Performance measures for 2012 are based on Delta's Pre-Tax Income, as defined below. The following table describes the performance ranges and award payout levels for 2012 Financial Performance, subject to Section 4(c) above:

 
Threshold
Target
Maximum
% of Target Financial Performance Measure Paid
50%
100%
200%

Required 2012 Pre-Tax
Income
$837 Million
$1,674 Million
$2,227 Million

Payouts will be straight-line interpolated when Pre-Tax Income results fall above Threshold and below Target or above Target and below Maximum.

     "Pre-Tax Income" will be the amount of Pre-Tax Income, if any, determined under the Profit Sharing Program for 2012.1

(b)     Operational Performance Measures. The Operational Performance measures for 2012 are based on both Delta and Delta Connection operational performance, with (i) Delta's operational performance accounting for 75% of the measure and (ii) Delta Connection performance accounting for 25% of the measure. Delta's Operational Performance is based on the number of times during 2012 that Delta meets or exceeds its monthly goals under the broad-based employee shared rewards program (the "Shared Rewards Program"). Delta Connection's Operational Performance is based on the number of times during 2012 that the Delta Connection carriers meet or exceed their monthly operational goals for (x) completion factor and (y) on-time performance (the "Delta Connection Goals"). The Delta Connection Goals and the methodology for determining whether these goals are met are described in Exhibit A hereto. The following table describes the performance ranges and award payout levels for 2012 Operational Performance, subject to Section 4(c) above:

_________________________________
1    The Profit Sharing Program for 2012 defines "Pre-Tax Income" as follows: for any calendar year, the Company's consolidated pre-tax income calculated in accordance with Generally Accepted Accounting Principles in the United States and as reported in the Company's public securities filings but excluding: (a) all asset write downs related to long term assets, (b) gains or losses with respect to employee equity securities, (c) gains or losses with respect to

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