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Pinnacle Airlines defends execs' pay increases

Pinnacle Airlines on Friday defended the six-figure pay hikes it recently gave its two top executives, saying it needed to retain their services as the company moves through bankruptcy.

In a letter to Buffalo-area members of Congress, Eric T. Epperson, Pinnacle's vice president for corporate culture and communications, said the raises came after the departure of the company's chief financial officer "and in anticipation of the substantial challenges ahead."

Sean Menke, the company's chief executive officer, got a raise from $425,000 to $675,000. The chief operating officer, John G. Spanjers, will see his pay hiked from $275,000 to $400,000.

"Both executives have vast experience navigating through the Chapter 11 process, and the board determined it is in the best interests of Pinnacle and all of our stakeholders to appropriately incentivize two executives who play vital roles in the future of this company," Epperson wrote.

The Buffalo area's three House members and New York's two senators wrote to Pinnacle last week to complain about the executive pay raises at the airline. Pinnacle owns Colgan Air, which operated Continental Connection Flight 3407, which crashed in Clarence in 2009, claiming 50 lives.

The pay raises came less than two weeks before Pinnacle filed for bankruptcy, and at a time when pilots were complaining about not being paid in full and on time for their services.

"It is reprehensible and unconscionable that your company would shortchange its pilots, who are critical to the safety of the flying public, while approving hundreds of thousands of dollars in extra payment for its corporate officers," the lawmakers said in a letter to Spanjers.

In Pinnacle's response, Epperson said: "Pinnacle's board of directors saw fit to secure the long-term commitment of both Mr. Menke and Mr. Spanjers in the form of compensation adjustments."

In addition, Epperson said Pinnacle was fixing the pilot pay problems, which the airline blames on implementation of a new payroll system and difficulty combining the payroll operations of Colgan and Mesaba Airlines in the Pinnacle system.

"We are taking the situation very seriously and have reallocated our corporate resources to correct the problems as soon as possible," wrote Epperson, who added that the payroll issues and executive raises "are very much separate issues."