Why CEOs Give Up Their Salary During a Crisis

Key insight:

While the C-suites of America’s top airlines are asking the U.S. government for what could amount to more than $50 billion in financial aid, many CEOs are giving up their salaries in a show of solidarity for the critical times we are all living in.

In a letter to their employees, United Airlines CEO Oscar Munoz and president Scott Kirby said they would give up their salaries through the end of June. This morning, JetBlue Airways CEO Robin Hayes and president/COO Joanna Geraghty announced a 50% “pay reduction.” And when Delta Air Lines CEO Ed Bastian announced that his company would be cutting capacity by 40%, he also shared that he’d forgo his full salary “effective immediately, for the next six months.”

“We will get through this, and taking strong, decisive action now will ensure that we are properly positioned to recover our business when customers start to travel again,” Bastian added.

As international borders close, grinding both business and recreational travel to a halt, airlines are obviously vulnerable. But when the economic damage to the aviation industry could top $113 billion, what’s the point of CEOs shedding their mere million-dollar salaries?

“It’s totally symbolic,” said Eric Dezenhall, head of the crisis communications firm Dezenhall Resources. “This is the kind of thing that’s expected during difficult times. It diffuses a modicum of resentment amongst staff.”

For perspective, Bastian’s salary at Delta was about $900,000 in 2018. He received an additional $14 million in compensation related to Delta’s performance, including stock. That stock, which peaked this year at $63 dollars a share in July, is trading in the low $30 range today.

And airline CEOs aren’t alone. On Tuesday, it was reported that Hyatt’s executive chairman Thomas Pritzker and CEO Mark Hoplamazian would forgo their entire salaries at least until the end of May, with the money going to an “employee care fund.”

“It’s a way of showing empathy for workers down the line, the housekeepers or restaurant workers who may or may not have worked that week,” said Chuck Kelley, a hospitality consultant who spent more than 30 years with Marriott. “It has a little impact on corporate overhead. Obviously, they’re the highest-paid person in the structure.”

It’s worth noting that the average CEO earns more than 271 times their average employee.

“It’s not like you get a standing ovation for doing it,” Dezenhall said. “The general attitude is that these guys have too much money anyway.”

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