Gesture Isn't As Empty As You Might Think
It's a show of solidarity that will never, ever be termed
'Tilton-esque.' JetBlue Airways CEO Dave
Barger announced this week he has given himself a pay cut, shaving
50 percent from his $500,000 annual base salary days after his
airline posted a $7 million loss in the second quarter.
One could argue that's still too much for the CEO of a
money-losing airline to take home... especially as Barger, like
other airline executives, also receive bonuses and other perks on
top of their base pay.
It's worth noting that Barger did not receive a bonus in 2007,
according to Newsday... but he did collect a total of $514,642 when
stock options, non-equity incentives and "other compensation" was
Barger said he made the decision to slash his salary "in
recognition of the challenges faced by the company and its
employees in the current industry environment." JetBlue lost $7
million in the last quarter, and has previously announced it will
cut capacity by as much as 9 percent by the end of the year...
With his announcement, Barger is at least the third airline CEO
to take the pruning shears to his own paycheck, as the nation's
airlines grapple with the effects of high fuel prices, and the need
to shed close to 26,000 jobs industrywide. In June, Continental CEO
Larry Kellner said he would forgo his entire salary and bonuses
through the end of 2008.
Bloomberg adds AirTran CEO Bob Fornaro will take a 15 percent
pay cut, starting in August.
Media reactions to such pay cuts are generally favorable, though
Barger's gesture stands out somewhat. Reuters terms Barger's move
as "a show of solidarity with employees as the low-cost carrier
struggles with soaring fuel prices and a slowing US economy."
Zac Bissonnette, with the financial website 247wallstreet.com,
writes Barger's decision carries some added gravitas over
"Whenever I hear about grand gestures like this, I'm immediately
skeptical: halving the base salary sounds impressive but, at many
companies, the CEO's pay is so lopsided toward guaranteed bonuses
and stock grants that it's meaningless," he writes. "Not so at
Barger replaced ousted CEO David Neeleman in May 2007. Neeleman,
the airline's founder, was forced out in the wake of a series of
weather-related operations snafus that shut down the low-cost
carrier for days.