New United Airlines exec snags $525,000 salary — let’s hope it doesn’t ask for a bailout
It occurred to me as I was reading United Airlines’ latest FORM 8-K/A filing that if the airline ever asks for a federal bailout (assuming the rescue plan ever gets passed) it might run into some accounting problems. It also underscored that even in the worst of times — the airline lost $2.7 billion last quarter — executive compensations almost never take a hit.
Kathryn A. Mikells will become United’s senior vice president and chief financial officer next month. In forms filed with the Securities and Exchange Commission, United has disclosed that Mikells will receive an annual salary of $525,000 and an annual incentive award opportunity of 60 percent of annual salary. She could end up pocketing closer to $1 million next year.
That’s a pretty generous compensation package, particularly with the economy in freefall and her airline hemorrhaging money. Now, I don’t have a problem with a company paying whatever it wants to an executive. After all, it’s a free market.
Or is it? Well, if you look at the details of the bailout agreement — which is likely to get passed today or tomorrow — you’ll notice provisions that cut the executive pay tax deduction from $1 million to $500,000 and limiting performance-based pay and stock options.
And the way I read it, the government is essentially saying that Mikells’ salary is over the limit.
Now, let’s be clear about one thing. United isn’t a bank — it isn’t asking for a bailout. At least it isn’t asking for one yet.
But I wonder: Why, at a time like this, would any airline lavish an executive with this kind of money?
My point? Travel companies in general, and airlines in particular, should be cautious about overly generous executive compensations at a time like this. It would be easy to give the wrong impression to passengers who are being asked to pay more for less — and employees who are being asked to make more sacrifices for the company.
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11 Responses to “New United Airlines exec snags $525,000 salary — let’s hope it doesn’t ask for a bailout”
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Because times like these require the best people for the job. In order to get the best people, you need to pay accordingly. I don’t think the salary on offer is way off for Ms Mikells. Airlines ran into problems previously because they constantly paid under the market rate for senior level positions. This lead to poor leadership and decision making. By investing in people, it should reap dividens. And if it doesn’t - these people are out. Holding executives accountable is the key.
That’s actually a rather low salary for the CFO of a major company, the firm I work for is far smaller than UA (albeit profitable) and our CFO would laugh at that salary package.
Here comes the argument that to retain a qualified Management workforce, you need to compensate them accordingly. I cant tell you how many times I’ve watched a CEO, CFO, and OTHERS swaltz right in and OUT with their GOLDEN PARACHUTES after a “few” years on the job. BIG PAY CHECKS, BIG STOCK OPTIONS and RETIREMENT PACKAGES, yet the employees are left with salaries that compare to 1988 levels. Fight for years to get a decent raise or improvement to their contracts. Once a contract becomes amendable, the company will negotiate at a snail’s pace, often doing so for SEVERAL YEARS. An impasse occurs and you wonder why LABOR votes to strike. Patience has run it’s course when you watch these individuals (rather well) COMPENSATED regardless of whether they contribute to a profitable company or not.
What do you mean if EVER? What the hell do you think happened after 9/11?
Were those billions in dollars given to the airlines industry NOT a bail out?
That’s another example of governement stepping in, supposedly to “stop the bleeding” only to have it come back to bite the American Taxpayer in the behind later. Airlines bailed out after 9/11–continued poor service today, due to money loosing carriers. Any one else see the connection. Hmmm….shocking.
I agree with Oscar - that sounds like a pretty modest salary for a CFO of a company the size of UAL.
ACTUALLY, if Ms Mikells friends would quit writing and start reading, they would find that United executives have the highest levels of pay in the airline industry while providing the lowest quality product by the industry standards. All of their pre-9/11 pay has been restored while ALL the other airline employee groups have yet to approach their pre-9/11 incomes. This despite the the fact that sacrafices were to be ’shared’ by all employees, as guaranteed at the time. Despite what their OWN industries provide, the comparison is meaningless. If they think things have improved with the current temporary executives, they haven’t done their homework.
We already took over United’s Pension bailout, that idiot was supposed to be the best for the job. Also, if the ******** in those positions did a better job, they would not be in the positions they are in, they should be more concerned about making money for the company rather than themselves. Get real people, we are getting screwed and you are all blind.
My favorite executive pay practice is earning bonuses after filing for bankruptcy or claiming golden parachutes after a forced sale (see some of the recent bank near-failures). These should all be nullified, IMO.
I’m with John on this one. If you are truly qualified for the job, then executive pay should be $1 - that’s right one dollar. You should already be well healed by the time you are a CEO that you can live off your past pay checks. Most of the CEO’s in any buiness are already millionaires, so they don’t really need the income. And all their trips, parties, etc. are paid for out of company money. As others have pointed out, the workers who really make the company tick are getting paid peanuts with no annual salary rise and expected to stay on the job with no bonus. What would happen if ALL the workers changed jobs every 2 years - where would all the corporate knowlegde be? Could the CEO really run the company if they lost ALL the lowest paid employees?
If these senior bozos at the U.S. legacy carriers would be paid on a performance basis their salaries would soon be in the very low six figures to be justifiable!
I have nothing against high executive pay, provided it is in return for excellent performance and that is certainly not the case for most carriers or many other major companies, e.g. banks…. Nevertheless, the corner office types continue to be overpaid while the layoffs continue. At the same time the public is surprised at how low the quality of service is today, if we can talk of service at all. Pathetic!
I for one am very against these obscene pay compensations that executives get…
Take a look at Nardelli, the CEO of Home Depot. In his 4 year reign, his company lost over 12% of it’s value, yet when he was “asked” to leave, he still walked out with his bonus’s and forgivin loans and golden parachute intact.
Look, I’m all for compensating an executive what he/she is worth, but come on…make it comensurate to performance! If the company does good, the executive gets their full salary plus a reasonable bonus. If the company does poorly, then the executive should get his negotiated salary minus double the value the company went down in value…
That seems like a reasonable compensation package to me!
Ed
web/gadget guru