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?
Just another example of how executive pay bears no relationship to performance and actual _value_ that these people provide.
Its probably most accurately described as a boys club. And now they are in the public spot light they can’t even rein it in – because they believe they are entitled. It really is pathetic – because it demonstrates they cannot have the smarts that’s supposedly why they are so valuable.
It is a fascinating that we have been convinced that airlines, banks, drug companies, doctors, auto companies, tobacco companies, insurance companies, and many other businesses are the evils in society, while the government forcibly takes our money, creates no wealth, and is legendary for waste, fraud, and low quality. Before you attack an entire business or industry, just think of the jobs created by the business, the lives improved by its services to *willing* customers, and the advancement free market brings. Then think of what the government has done to the lives of those who cannot opt out: the IRS, DMV, post office, always-under-construction roads, poor schools, overrun emergency room, vaccine shortages, welfare that impoverishes those receive it, state lotteries that tax the poor.
No matter how bad an industry gets by itself, the easiest way to make things worse is government involvement. How do you make a terrible business model change? Let the customers make the decisions, and force the business to compete. If the customers and employees are happy, stop trying to find problems.
I own stock, and couldn’t give you a complete portfolio. Like most others the funds are tied up with investment groups. We can’t get together and throw the boards out. By the time I get a statement much of the stock has been rolled over. It’s not the 1950’s with proxy wars. Who’s going to stop boards from offering these lucrative deals?
25 top executives receiving 90 million doesn’t seem like very much. Eisner got 203 million at Disney one year.
#2 srgothard
Really? Who thinks that? Inefficiency, waste and inequality is just that wherever it is.
I don’t think people’s horror at seeing the curtain reveal how big business executive work and get renumerated, changes their opinion of government, except negatively perhaps for thinking why the hell doesn’t someone do something about this?
That said I’m not sure that will work well – at least a direct approach. Stopping having companies which are too big to fail will help, and help with the renumeration issue. Will also encourage competition etc. Doing that would require government intervention.
wow only 90 million ! why that’s only 15,000 years worth health insurance for me… the poor poor executives! how will they survive!
flight attendants and other unionized employees have given up about 1/3 of their paychecks and a large part of their benefits since 9/11. They have had no contract for 2 years. Prepare for a strike in January.
They got paid $90M to eliminate 6300jobs @ 57k/job = Saved $360M, with overhead/pensions/healthcare probably close to double that, so a reasonable ROI.
If they had only received $50M in bonuses they might have only fired 3000 workers and so cost the company $100s of millions.
Either you are for free enterprise or you aren’t.
The salaries are disgusting…. sure… but what is the alternative? More legislation? Yeah, let the government dictate what you can earn.
“Sorry Mr. Nincompoop, We feel that a structural engineer’s salary should be capped at $5,375.94… unless your company earns a profit. Then you can make up to $105,366.07. After that you have to use 40% of your profit to hire new people. (etc., etc.)”
sickening. And all this in an industry that despite heavy subsidies, hasn’t ever shown a long term profit, often nearly bankrupt.
Oh, and also an industry whose lack of security lead to the 9/11 disaster.
On a grander scale, CEO pay IS now being addressed by stockholders at least in some industries. I hold stock of a former employer in a 401K and every year, a group of stockholders has put forth a plan for review of executive pay. It was rejected every year for the past 10 years, but it passed in 2009.
I was wondering how the right wing nuts would spin this. I wasn’t disappointed
Executive compensation should be a multiple of average employee compensation. Easy Peasy.
DELTA..
asked all its employees to take a 10% pay cut for 6 months..
After 6 months, the pay didnt go back up..
But the TOp wage earners, got a bonus..
Stocks USED to be a sign of ownership in the company…NOW you get nothing.
In most cases, you get a SMALL stipend for the USE of your money. LESS, then the interest rate they would be charged by a BANK..
Then the reality of it..THAT you will probably have PROBLEMS getting your money OUT of some of these companies..
#9 That is illogical. “Free Enterprise” isn’t that easily pigeonholed. There is not one flavor. We, in the USA, don’t have what I think you call free enterprise. We have taxes, eminent domain, zoning restrictions, protections from monopolies, OSHA laws, workers’ comp., and on and on.
But you probably don’t think in a manner that allows nuance.
If you average out the low and high income producing years of a 40 year working lifetime and can average $25,000 a year, you just barely make a million dollars. After taxes you live on a little over half of that.
So to pay an Eisner 203 million for one years work is equal to giving THAT ONE PERSON the equivalent value of the 40 year working lifetimes of 203 people, or 8120 years worth of human labor.
I defy anyone trying to tell me that one person is capable of adding that much value to anyone else in just one year and therefore is entitled to such outrageous compensation.
#14, Bryan P Carney, so you are in favor of government intervention in private business compensation rates?
> so you are in favor of government intervention in private business compensation rates?
No if they don’t receive any government bailout money.
If they take government money and give it straight to the CEO can I just go to Fort Knox and take some for myself?
You wouldn’t want them to not be able to get the best people, would you?
To Nobody, in particular…
That’s the government’s fault for not setting reasonable limits and expectations on what the CEO’s could do with the money. The gov was incredibly negligent IMO.
So no, you can’t go to Fort Knox and take gold unless the government takes you to the vault, opens it up, and then doesn’t even think to watch what you do for a whole month.
Would I blame you if you took some? Not likely.
iTS IDiotic what companies are paying IDIOTS.
what makes THOSE jobs more important then THOSE of the FLIGHT LINE and BAGGAGE carriers.
If you pay those on the bottom GOOD wages they get FIRED if they goof up, or steal. THOSe on top dont need to steal, they are given money NOT TO..
IF a WHOLE plane or CARGO/baggage went missing.. they would fire those on the bottom, and it would REALLY mess up reputation of the company. which could hurt them for years. BUT STILL things are lost, and stolen.
Those on the bottom are MORE responsible for the company then THOSE on the top. WHY in hell are those on top making all the money, THAT COULD be put back into the company, AND SAVE IT.
I do not see the WORK those idiots do. IS IT REALLY needed.
LET THEM DIE..
The gov has given them money TO MANY TIMES..
CUT TOP wages…
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!!!