REPUBLIC CHIEF COULD GET $3.3M IN MERGER.(Business)

Byline: Tony Kennedy

If Northwest Airlines gets approval to acquire Republic Airlines, Republic President Stephen Wolf would reap about $3.3 million in stock and salary arrangements.

"It's a strange deal because you would think some of that money would come from a golden parachute," Red Tyler, Republic's director of corporate communications, said Wednesday. "There is no golden parachute."

Wolf, 44, has said he would leave Republic soon after the two airlines merge, assuming the deal gets shareholder and federal approval.

In other large corporate takeovers, benefits have been lavished on top executives who agree to leave when their company is purchased. The deals are known as golden parachutes because they are negotiated as a condition of the merger by the executives who are bailing out, said Bill Whitlow, a stock analyst with Minneapolis-based investment banking firm Dain Bosworth Inc.

"I think what you've got here is Wolf getting the fruits of his labors for having made Republic an attractive company," Whitlow said from his office in Seattle. "That gain is due to the stock appreciation, not the paying off of the executives."

Shareholders of Republic are scheduled to meet April 23 in Wausau, Wis., to vote on whether to approve Northwest's planned $884 million acquisition of Republic. The deal also must be approved by the U.S. Department of Transportation.

Northwest would become the nation's third-largest air carrier and the deal would go down as one of the largest in airline history if it is approved.

Wolf would clear about $1.92 million before taxes by exercising stock options he negotiated when he came to Republic in 1984, according to a company proxy statement released Wednesday.

Under the merger agreement, NWA Inc., the parent company of Northwest, would pay $17 for each share of Republic stock. When Wolf arrived at Republic the stock was selling in the $4 range, which is the price he would pay on most of his options, Tyler said.

The proxy statement also says Wolf would receive about $951,000 from Northwest to cover the salary that was promised him up to April 1989 at Republic.

In addition, documents on file with the Securities and Exchange Commission in Washington, D.C., list Wolf as the owner of 25,000 shares of Republic stock. The SEC filing says Wolf paid an average of $4.13 a share for that stock so it would bring him a before-tax profit of more than $321,000 in the merger.

Tyler said Wolf was paid a "notoriously low" salary at Republic compared to industry standards because the company was "in the depths of depression" when he arrived. Wolf's 1985 salary was more than $243,000, according to the proxy.

Republic lost millions of dollars in four consecutive years starting in 1980. The loss in 1983 was the most severe at $111 million.

When Wolf arrived he hired a small crew of top executives from the outside to help reshape Republic. His credentials included 17 years of experience in the airline industry.

Wolf reversed the losses partly by cutting wages 15 percent and improving the company's route system. The recovery was boosted in 1985 by a 25 percent increase in passenger traffic, a 116 percent increase in cargo hauled for the Postal Service, reduced fuel costs and an overall strong economy, according to the annual report.

Tyler said Wolf is not the only person who will profit if the merger is approved. The employees agreed to wage concessions on the condition that they would share in any of Wolf's success, Tyler said.

When pay was reduced, the company set aside 5.5 million shares of stock then worth about $19.25 million, Tyler said. Under the merger, the stock would be worth some $93.5 million and Tyler said the cash would be distributed to about 11,000 of the company's employees.

Officials from Northwest expect the merger to be approved by the end of this month despite the Justice Department's strongly worded objection to the deal.

The department said the merger would stifle airline competition and result in higher fares for consumers. Both companies are based at the Minneapolis-St. Paul International Airport and they control nearly 80 percent of the 63 gates there.

The Department of Transportation will decide whether to approve the acquisition. Ted Lapeckowitz, a DOT information specialist in Washington, said Wednesday he will have a better idea in about two weeks about the timing of the decision.

He noted that a decision by April 30 would require "extremely quick action."

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