Three of Alaska Air’s top four highest-paid executives cut salaries in 2020, including a more than 40% drop by its CEO, a year after the airline lost $ 1.3 billion due to a COVID-19 airline strike. epidemic.
According to a statement from an Alaska proxy detailing the executive’s payroll on Friday, the airline board in November partially eased wage cuts through special share bonus options aimed at “keeping key members of the company’s economy through the epidemic.”
One of the executives whose pay was increased last year was Ben Minicucci, who on Wednesday resigned as retired CEO Brad Tilden. For that promotion, the board awarded Minicucci shares և $ 1.5 million worth of options, which, along with the November prizes, offset its other overall compensation hits.
As a result, Minicucci’s effective overall compensation increased from $ 3.5 million in 2019 to $ 3.9 million in 2020.
In an application on Friday, the board announced that a special grant to Minicucci was to “recognize his responsibilities as the next CEO of the Company, recognize through the COVID-19 crisis his role as President դ to maintain Mr. Minicucci’s involvement i to equalize his Long-Term Compensation ”with Alaska Long-Term Performance.
The proxy presentation details the overall compensation for Tilden և Minicucci 2020, as well as և CFO Shane Tackett, Chief Commercial Officer Andrew Harrison և CEO ary Gary Beck.
Stock prizes are suddenly worthless
Tilden և Minicucci waived their basic salary during the first seven months of the airline crisis, while other executives received a 30% base salary reduction during the same period.
Share rewards for executives make up a much larger portion of the total compensation than the base salary. They were also affected by the epidemic. In February 2020, part of the stock grants awarded in the previous two years depended on the implementation of financial goals, which were clearly impossible to achieve in just one month.
That’s why the figures in Friday’s financial statement “summary reimbursement chart”, which apparently show that each executive earned more last year than in 2019, are misleading.
Details found elsewhere in the application show that these figures include the expected value of the stock ransom on the day they were awarded, the millions of dollars that have disappeared along with the company’s unhealthy 2020 financial performance.
Tilden, for example, was credited with 18,000 shares in February 2020, valued at $ 1.2 million at the time. But cashing in on those stocks required a financial return, which was now completely unavailable.
“As soon as COVID hit, in terms of accounting, we wrote off the entire value. “In February 2020, the award for 18,000 shares is now zero,” said Alaska Vice President of Finance Chris Berry in an interview. “They were awarded in February, and in March – worthless.”
The same goes for the 2019 և 2018 Tilden Shares, which depended on the company’s financial performance over three years. The lost value of the prizes in those two years zeroed in on an additional $ 1.7 million in Tilden’s 2020 compensation.
Maintenance grants reduce salary hits
As a result, Tilden’s adjusted total compensation in 2020 was $ 3.2 million, down from $ 5.5 million in 2019, a reduction of more than 40%.
Tilden has been president of the Alaska Council since Wednesday.
Tackett’s overall compensation did not fall as much as he rose to the CFO in March 2020 with the necessary payroll and share bonuses. His adjusted total compensation in 2020 was $ 2 million, down from $ 2.1 million in 2019.
The total compensation adjusted by Harrison in 2020 was $ 1.5 million, down from $ 2.6 million in 2019.
Beck’s adjusted total compensation for 2020 was $ 1.8 million. He became a COO only at the end of 2019, so his total compensation for that year is not available.
Beck will retire as COO on April 3, although he will remain until February next year as Special Adviser to the CEO. Constance von Moulin replaces Beck as COO in April.
All the executives would have made a bigger reduction in compensation had it not been for the Conservation Grants Board in November.
Tilden was awarded $ 1 million worth of shares and options. The Minicucci is valued at $ 750,000, and Taketti, Harrison և Beck are valued at $ 500,000 each.
These maintenance grants, which will be paid in equal installments over each of the next three years, are conditional on continuing to work during that period or, in Tilden’s term, continuing as chair of the board.
The proxy statement states that the current value of Tilden’s pension package is $ 5.4 million.