Airline Executive's pay
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Joined: May 2001
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From: New Jersey Shore
Airline Executive's pay
The men who are running the airlines into the corporate grave are themselves
guilty of wretched excesses. They have no sense of personal shame, no sense
of fiduciary responsibility and absolutely no agenda except cashing out.
American's parent, AMR, lost $3.5 billion last year and yesterday it
reported a $1 billion first-quarter loss. After weeks of
negotiations, promises that executives would share in sacrifices and threats
of a bankruptcy filing, the airline secured $1.8 billion in annual
concessions from pilots, mechanics and flight attendants. Then the
agreements imploded when American admitted in delayed SEC filings that it
had shielded some of the pensions of the airline's top 45 executives from
the effects of a bankruptcy filing. The top six executives were also offered
"retention bonuses" of nearly twice their base pay to stay with the airline.
Earlier this week, Carty cancelled the retention-bonus plan and apologized
for misleading the unions, but he didn't repeal the trust that protects the
executive pensions nor did he apologize for allowing the executive booty in
the first place. He finally resigned, and at this writing, I have no idea
of the size of his Golden parachute, but I'll bet it's a beauty.
Continental's Gordon Bethune gave himself a pay package of about $7.6
million last year, more than 82 percent above his 2001 compensation. Along
with stock options and other perks, Bethune's 2002 compensation was $11.9
million. The airline's other top executives were proportionately
rewarded.Mullin paid himself a $1.4 million cash bonus. The excesses at
Delta led Congress to write some minimal rules about executive payouts into
its latest airline bailout package, but Mullin and crew seem blind to the
rebuke. After taking a cosmetic pay cut last month, Mullin defended the
airline's egregious pay packets and "retention" bonuses, claiming he needed
to keep the executive team together. In other words, an airline that lost
$466 million in this year's first quarter--or the equivalent of more than $5
million a day--just can't afford to lose the crack executives who are
responsible for the carrier's alarming cash burn.
Northwest lost $798 million last year, yet chief executive Richard Anderson
paid himself a cash bonus of 50 percent of his
annual salary of $500,000. He also received a retention bonus of
stockworth almost $2 million more. Northwest also paid out millions in
retention bonuses to dozens of other top managers. This week, a Northwest
filing with the SEC revealed that former Northwest chief financial officer
Mickey Foret has been hired as a consultant. Foret was paid an up-front fee
of $240,000 and he draws a monthly stipend of $80,000 through December,
2004. Northwest reported a first-quarter loss of $396 million, more than
double last year's first-quarter loss of $171 million. It is also
negotiating with its labor unions and rank-and-file workers, demanding
almost $1 billion a year in concessions.
United Airlines paid new chief executive Glenn Tilton nearly $12 million to
join the sinking ship last fall. He promptly ensconced himself in an
$18,000-a-month condo on the company expense account. Since his arrival, the
airline has filed for bankruptcy and reported a 2002 loss of more than $3
billion. His recovery plan for the carrier has been ridiculed by the
government agency that administered the 2001 loan-guarantee program,
United's bankruptcy-court judge and virtually any analyst that has examined
it. He is also paying the McKinsey consulting firm a monthly fee of about $1
million to help him develop a carrier-within-a-carrier even though United
has already failed with an earlier attempt to create a low-fare unit.
Meanwhile, United employees, who once owned 55 percent of the carrier in
exchange for massive wage and benefit concessions granted in the 1990s, have
lost all their equity. They have also been forced to accept billions more in
concessions as United used the shield of bankruptcy court to break or
renegotiate their contracts. Of course, all this comes against the backdrop
of the tens of millions former United boss Steve Wolf paid himself while he
ran the company.
US Airways was driven into bankruptcy by the aforementioned Wolf and his
team of cronies. They paid themselves hundreds of millions of dollars during
their disastrous six-year regime. They subsequently retired, but not before
the airline paid out $35 million in lump-sum retirement benefits to Wolf,
former chief executive Rakesh Gangwal and Larry Nagin, the airline's former
top legal official. After declaring bankruptcy, the airline terminated its
pilot's pension fund. Retired US Airways pilots now face pension cuts in the
neighborhood of 70 percent. Meanwhile, the new management team continues to
reward itself lavishly. The current chief executive, David Siegel, received
2002 compensation of $533,000 in salary, a cash bonus of $750,000 and more
than $160,000 in other compensation. Other notable figures in the airline's
SEC filings: US Airways paid Siegel $68,000
in moving expenses last year. The new chief financial officer, Neil Cohen,
received $40,640 in moving expenses. That's about the same amount a senior
flight attendant at US Airways now earns.
One final note. Remember that 2001 taxpayer-funded airline bailout of $4.5
billion? Hawaiian Airlines received about $30 million of it, but that didn't
help the carrier avoid a bankruptcy filing last month. Boeing, which is one
of Hawaiian's biggest creditors, wants the carrier's management removed.
Boeing claims Hawaiian's management paid out more than $25 million
via a tender offer last year as a "reward" to shareholders. In a filing with
the bankruptcy court, Boeing adds that members of Hawaiian's management and
their affiliates received more than 69 percent of the $25 million tender. In
other words, Boeing believes Hawaiian's management personally pocketed more
than half of the $30 million in taxpayer grants.
And so it goes. With the Iraq war, SARS, etc. keeping the public's eye, much
of this has been swept under the rug.
guilty of wretched excesses. They have no sense of personal shame, no sense
of fiduciary responsibility and absolutely no agenda except cashing out.
American's parent, AMR, lost $3.5 billion last year and yesterday it
reported a $1 billion first-quarter loss. After weeks of
negotiations, promises that executives would share in sacrifices and threats
of a bankruptcy filing, the airline secured $1.8 billion in annual
concessions from pilots, mechanics and flight attendants. Then the
agreements imploded when American admitted in delayed SEC filings that it
had shielded some of the pensions of the airline's top 45 executives from
the effects of a bankruptcy filing. The top six executives were also offered
"retention bonuses" of nearly twice their base pay to stay with the airline.
Earlier this week, Carty cancelled the retention-bonus plan and apologized
for misleading the unions, but he didn't repeal the trust that protects the
executive pensions nor did he apologize for allowing the executive booty in
the first place. He finally resigned, and at this writing, I have no idea
of the size of his Golden parachute, but I'll bet it's a beauty.
Continental's Gordon Bethune gave himself a pay package of about $7.6
million last year, more than 82 percent above his 2001 compensation. Along
with stock options and other perks, Bethune's 2002 compensation was $11.9
million. The airline's other top executives were proportionately
rewarded.Mullin paid himself a $1.4 million cash bonus. The excesses at
Delta led Congress to write some minimal rules about executive payouts into
its latest airline bailout package, but Mullin and crew seem blind to the
rebuke. After taking a cosmetic pay cut last month, Mullin defended the
airline's egregious pay packets and "retention" bonuses, claiming he needed
to keep the executive team together. In other words, an airline that lost
$466 million in this year's first quarter--or the equivalent of more than $5
million a day--just can't afford to lose the crack executives who are
responsible for the carrier's alarming cash burn.
Northwest lost $798 million last year, yet chief executive Richard Anderson
paid himself a cash bonus of 50 percent of his
annual salary of $500,000. He also received a retention bonus of
stockworth almost $2 million more. Northwest also paid out millions in
retention bonuses to dozens of other top managers. This week, a Northwest
filing with the SEC revealed that former Northwest chief financial officer
Mickey Foret has been hired as a consultant. Foret was paid an up-front fee
of $240,000 and he draws a monthly stipend of $80,000 through December,
2004. Northwest reported a first-quarter loss of $396 million, more than
double last year's first-quarter loss of $171 million. It is also
negotiating with its labor unions and rank-and-file workers, demanding
almost $1 billion a year in concessions.
United Airlines paid new chief executive Glenn Tilton nearly $12 million to
join the sinking ship last fall. He promptly ensconced himself in an
$18,000-a-month condo on the company expense account. Since his arrival, the
airline has filed for bankruptcy and reported a 2002 loss of more than $3
billion. His recovery plan for the carrier has been ridiculed by the
government agency that administered the 2001 loan-guarantee program,
United's bankruptcy-court judge and virtually any analyst that has examined
it. He is also paying the McKinsey consulting firm a monthly fee of about $1
million to help him develop a carrier-within-a-carrier even though United
has already failed with an earlier attempt to create a low-fare unit.
Meanwhile, United employees, who once owned 55 percent of the carrier in
exchange for massive wage and benefit concessions granted in the 1990s, have
lost all their equity. They have also been forced to accept billions more in
concessions as United used the shield of bankruptcy court to break or
renegotiate their contracts. Of course, all this comes against the backdrop
of the tens of millions former United boss Steve Wolf paid himself while he
ran the company.
US Airways was driven into bankruptcy by the aforementioned Wolf and his
team of cronies. They paid themselves hundreds of millions of dollars during
their disastrous six-year regime. They subsequently retired, but not before
the airline paid out $35 million in lump-sum retirement benefits to Wolf,
former chief executive Rakesh Gangwal and Larry Nagin, the airline's former
top legal official. After declaring bankruptcy, the airline terminated its
pilot's pension fund. Retired US Airways pilots now face pension cuts in the
neighborhood of 70 percent. Meanwhile, the new management team continues to
reward itself lavishly. The current chief executive, David Siegel, received
2002 compensation of $533,000 in salary, a cash bonus of $750,000 and more
than $160,000 in other compensation. Other notable figures in the airline's
SEC filings: US Airways paid Siegel $68,000
in moving expenses last year. The new chief financial officer, Neil Cohen,
received $40,640 in moving expenses. That's about the same amount a senior
flight attendant at US Airways now earns.
One final note. Remember that 2001 taxpayer-funded airline bailout of $4.5
billion? Hawaiian Airlines received about $30 million of it, but that didn't
help the carrier avoid a bankruptcy filing last month. Boeing, which is one
of Hawaiian's biggest creditors, wants the carrier's management removed.
Boeing claims Hawaiian's management paid out more than $25 million
via a tender offer last year as a "reward" to shareholders. In a filing with
the bankruptcy court, Boeing adds that members of Hawaiian's management and
their affiliates received more than 69 percent of the $25 million tender. In
other words, Boeing believes Hawaiian's management personally pocketed more
than half of the $30 million in taxpayer grants.
And so it goes. With the Iraq war, SARS, etc. keeping the public's eye, much
of this has been swept under the rug.
Joined: Jan 2002
Posts: 370
Likes: 0
From: North of London
I.M.Esperto, great post!! I suppose the point that you are making is that so often management pay themselves huge salaries and bonuses, not to mention share options and other perks only to not do the job they are paid and in many cases ruin the lives of the pilots they mismanage!! Steven Wolf made many bungled decisions while at United, gets a golden goodbye (the airline, years later is currently in Chapter 11 as a result of those mistakes) and now he is doing the same at US Airways, whose pilots have to retire on far less than they deserve after a lifetime of faithfull service to that carrier and too old to get another job!
I was at Air Europe and now feel that the many mistakes made there at the time changed the whole course of my career. I was in to debt up to my eyeballs so when the airline imploded, I lost a house and spent about two years paying back the damage. My Crime? To turn up tro work on time and do my job properly! The manangement parachuted into the next airline, probably never even thought of the dole queue which was knee deep in similarly affected pilots and cabin crew, engineers and ops people.
The world was amazed recently at the size of the package of the EX general Electric CEO, but when he (Jack Welch) bailed out after a lifetime of dedicated service, the company was about 100 times the size and one of the most profitable companies in the world, so his payout would not have come to light at all except his wife was divorcing him!
As you have indeed pointed out, when times are tough, good manement finds yet another way to screw it's loyal workforce. Don Carty, good riddance!
I was at Air Europe and now feel that the many mistakes made there at the time changed the whole course of my career. I was in to debt up to my eyeballs so when the airline imploded, I lost a house and spent about two years paying back the damage. My Crime? To turn up tro work on time and do my job properly! The manangement parachuted into the next airline, probably never even thought of the dole queue which was knee deep in similarly affected pilots and cabin crew, engineers and ops people.
The world was amazed recently at the size of the package of the EX general Electric CEO, but when he (Jack Welch) bailed out after a lifetime of dedicated service, the company was about 100 times the size and one of the most profitable companies in the world, so his payout would not have come to light at all except his wife was divorcing him!
As you have indeed pointed out, when times are tough, good manement finds yet another way to screw it's loyal workforce. Don Carty, good riddance!
Joined: Nov 2000
Posts: 1,016
Likes: 0
From: London,Bucharest...wherever...
Unfortunately this tends to be the case and not just in the airline industry...it is rampant across all businesses...
If you examine many recent problematic companies all the encumbant executives or those just removed are on a similar pay deal.
I was once told that as a rule of thumb a Chairman or CEO of a large publically quoted corporation should expect to get 1-2% of the companies' turnover (not profit) as his remuneration.
In many cases 'Chairman/Presidents' are not there to run the company but are to present the public face of the business to the shareholders and financial institutions, also to the politicians. Again in many cases these appointments are filled by career executives who are placed in the post through pressure or the 'old boy' network from the financial institutions and/or politicians...they look after their own...
As I say this is widespread across all business boardrooms...I myself have often wondered/questions how a Chairman/President can;
a) have no experience within the industry in which he is leading a company
b) leave a company that has failed during his tenure and then pick up another Chairmans' job a few weeks later!
Answer - interference from the financial institutions and/or the politicians!!
When a Chairman/President does not act to the benefit of the above 2 parties he is invariably removed, and their benefit is not necessarily in the best interests of the company in question, its' staff or its' long term future...
If you examine many recent problematic companies all the encumbant executives or those just removed are on a similar pay deal.
I was once told that as a rule of thumb a Chairman or CEO of a large publically quoted corporation should expect to get 1-2% of the companies' turnover (not profit) as his remuneration.
In many cases 'Chairman/Presidents' are not there to run the company but are to present the public face of the business to the shareholders and financial institutions, also to the politicians. Again in many cases these appointments are filled by career executives who are placed in the post through pressure or the 'old boy' network from the financial institutions and/or politicians...they look after their own...
As I say this is widespread across all business boardrooms...I myself have often wondered/questions how a Chairman/President can;
a) have no experience within the industry in which he is leading a company
b) leave a company that has failed during his tenure and then pick up another Chairmans' job a few weeks later!
Answer - interference from the financial institutions and/or the politicians!!
When a Chairman/President does not act to the benefit of the above 2 parties he is invariably removed, and their benefit is not necessarily in the best interests of the company in question, its' staff or its' long term future...
I'matightbastard
Joined: Jul 2001
Posts: 1,747
Likes: 0
From: Texas
Very good points but also worth noting is that Southwest used to pay Herb about $350,000 a year (though he got a lot of options too). That's my understanding, and the number could be wrong, but his base was ridiculously low compared with the rest of the industry.
Wait a minute, isn't SWA the only airline making a profit and the only one who said they wouldn't lay anyone off?
Must be a connection there somewhere.
Wait a minute, isn't SWA the only airline making a profit and the only one who said they wouldn't lay anyone off?
Must be a connection there somewhere.
Joined: Jan 2002
Posts: 370
Likes: 0
From: North of London
I've read loads of books on Herb Kelleher, and after each one all I can think of was:why wasn't I lucky enough to work for that man? Just as his airline puts it's own people first before the customers to get best results, the manangement put the staff before themselves and NOTHING is too much trouble for any of them. Why else would you have an airline that:
Always makes a profit, normally the biggest among US airlines;
Has pilots paying to type rate themselves to join;
Hardly anyone leaves; no-one gets laid off ever;
gets paid the most, and has the most fun?
Many other airlines have tried to copy, the closest is perhaps Gordon Betrhune at Comntinental; read his book "From worst to first" most of the others just suck! Don Cartty's action of ensuring the management pensions which ultimaltely got him fired, or asked to resign shows where the mans loyalty lies. But, all crews have been asked to give massive wage concessions in order to avoid Chapter 11, which the airline is only managing to avoid by this much!! I hope he chokes on his Golden parachute.
Always makes a profit, normally the biggest among US airlines;
Has pilots paying to type rate themselves to join;
Hardly anyone leaves; no-one gets laid off ever;
gets paid the most, and has the most fun?
Many other airlines have tried to copy, the closest is perhaps Gordon Betrhune at Comntinental; read his book "From worst to first" most of the others just suck! Don Cartty's action of ensuring the management pensions which ultimaltely got him fired, or asked to resign shows where the mans loyalty lies. But, all crews have been asked to give massive wage concessions in order to avoid Chapter 11, which the airline is only managing to avoid by this much!! I hope he chokes on his Golden parachute.
