In 2008, while the 5 remaining legacy airlines lost a cumulative $4.6 billion (excludes special charges), the 25 top executives collectively received over $90 million in compensation, averaging over $3.6 million per executive.
The legacy airlines are: American (AMR), Delta (DAL), United (UAUA), Continental (CAL) and US Airways (LCC).
So, while upper management did rather well, how did the other stake holders come out?
* In just one year, these 5 legacy carriers lost an incredible $17 billion of stock-holder equity as their cumulative market cap dropped from $21.9 billion to only $5 billion.
* 6,300 jobs were eliminated in 2008.
* The average annual wage per employee was $57,000 and unchanged from a decade ago.I guess we could use our imagination to estimate how much executive compensation would increase if the airlines actually made money?
LET THEM DIE..
The gov has given them money TO MANY TIMES..
CUT TOP wages…
What is needed is not necessarily government intervention. More stockholder intervention might help, but there are too many “protected” classes of stock, non-voting stocks, etc. There are just too few people who have any say about executive compensation: the executives and their buddy-buddies the boards of directors, many members of which are also executives looking for big paydays of their own. I say, give the unions some say in the matter, as in “we’ll take a ten percent pay cut if you will” and include all bonuses, deferred compensation, travel allowances, low-interest loans, stock options, personal use of company assets or property (cars, jets, vacation spots), membership dues whether professional or otherwise, reserved parking spot, etc., etc., etc.
They tried tying compensation to stock price, but that just led to the myriad pump-and-dump schemes that just (temporarily) inflated the stock prices and led to the downfall of many companies.
It’s kind of nuts to have the market value of an airline company depend on the stock market anyway. What of the physical value of hundreds of jet airliners, each costing more than one hundred million dollars? What of all the valuable real estate and airport gate assignments? There should be a floor to the market capitalization of a company based on what its actual capital equipment could bring on the open market.
All that said, 90 million spread out over that group doesn’t seem as bad as many I’ve heard about. Being in charge of billions of dollars worth of capital equipment and human talent should pay well. $3.6 million per year (average 90 mil/25) is maybe only twice what they’re worth?
MikeN said, on November 24th, 2009 at 6:48 am
25 top executives receiving 90 million doesn’t seem like very much. Eisner got 203 million at Disney one year.
Disney, unlike the airlines, actually makes a profit.
Well it certainly isn’t pilots raking in the bucks. I work at a desk job and make more money than 90% of the short hop pilots.
THEN comes the fun part..
CUTTING personnel..
cut a few pilots and what do you have??
1 pilot TRYING to make ends meet..Flying 16-24-26 hours…CRASH!!!