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 included.

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... costing jobs.

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 others'.

"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 JetBlue."

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.

FMI: www.jetblue.com