Northwest Airlines has announced that it and certain of
its subsidiaries are providing additional details on its salaried and
management employee equity plan. Approximately 5,200 salaried
employees worldwide are eligible to participate in the plan, which
will be funded with 5.5 percent of the equity in the reorganized
company.

  The Official Committee of Unsecured Creditors affirmatively
supports the plan.

  Approximately 400 Northwest employees at the director, managing
director and officer levels will be eligible to receive 4.9 percent of
the equity in the reorganized company. Sixty percent of the equity
grants will be in the form of restricted stock, which will have a
grant date value of approximately $232 million, assuming a $7.8
billion overall valuation for the company. The remaining 40 percent of
the equity will be in stock options. Both the restricted stock and
stock options will vest over a four-year period. The stock option
awards, which will be priced at fair-market value on the date they are
granted, will only have value if the management team achieves the
business plan and Northwest’s stock price appreciates.

  The management employee equity plan is part of a company-wide
compensation structure designed to ensure that all employees
participate in the financial success of the company, and to recognize
the contributions employees have made to the company’s successful
restructuring efforts. Previously, the company announced that salaried
employees below the director level will receive cash and restricted
stock units totaling $77.4 million. All contract employees and
non-executive salaried employees are expected to receive approximately
$1.5 billion in distributions through unsecured claims, profit sharing
and a performance incentive plan during the period of the airline’s
business plan, which runs through 2010.

  Roy Bostock, a member of Northwest’s Board of Directors and
chairman of the Compensation Committee, said, “Going forward, it is
critical that Northwest have the ability to offer a market competitive
equity compensation plan, a standard component of executive
compensation at virtually all Fortune 500 companies, in order to
retain and recruit experienced executive-level employees. This plan
strongly aligns the compensation of executives with the interests of
Northwest’s shareholders by tying their compensation opportunity to
the value of the reorganized company’s stock.”

  “Like all Northwest employees, our management team made financial
sacrifices that enabled the company to execute its successful
turnaround. In addition, Northwest’s management-attrition rate is
unacceptably high, resulting in significant financial and opportunity
costs for the company. This equity plan will enable Northwest to
recruit, retain and provide financial incentives to top-tier
management, which is a key to the company’s ongoing success.”

  Bostock continued, “This plan aligns executive compensation at
Northwest with the financial performance of the company, and the
four-year vesting schedule for the restricted stock and option awards
ensures continuity during what will likely continue to be a tumultuous
period for Northwest and the industry. These objectives are critical
to Northwest’s ability to achieve its business plan and produce
sustainable profits, which is in the best interests of Northwest’s
employees, investors, customers and business partners.”

  “The percentage of equity authorized by Northwest’s Compensation
Committee and approved by the Unsecured Creditors Committee is below
the average award level to executives at S&P 500 and Fortune 200
companies, and is also below average for post-Chapter 11 companies,
including both United and US Airways, two major U.S. airlines that
recently emerged from bankruptcy.”

  “Northwest’s successful restructuring was possible only because of
the hard work and sacrifices of all of our employees, and we believe
that employees at every level of the company should participate in the
future financial success of the company. I am confident that the
entire Northwest team will continue to work together to produce strong
results in the years ahead and will continue to provide excellent
service to our customers,” Bostock added.

  In designing the management equity plan, Northwest sought guidance
from several outside advisors, including Towers Perrin, a respected,
global consulting firm that specializes in executive compensation
matters.

  A revised Disclosure Statement will be filed with the United
States Bankruptcy Court for the Southern District of New York, which
is overseeing Northwest’s reorganization. The company intends to begin
the solicitation of acceptances to its Plan of Reorganization shortly.
A confirmation hearing for the court to consider approval of the Plan
of Reorganization is scheduled for May 16. The airline plans to emerge
from bankruptcy protection during the second quarter of this year.
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