How airlines executives could STILL earn millions of dollars under rules of $25 billion Treasury payroll bailout that saved their firms from collapsing amid coronavirus crisis
- Bailout deal has executive compensation caps, but execs could still earn millions
- Exact cap amounts are based on their 2019 compensation, which isn't yet public
- Plunging stock prices could also affect how much the CEOs take home
- $25 billion bailout forbids airlines from laying off workers until September
- Airlines have seen stunning 95% drop in demand in coronavirus crisis
- They hope they can ride out the crisis with the taxpayer funded bailout
- Learn more about how to help people impacted by COVID
The CEOs and executives of America's top airlines could still stand to make millions this year under the rules of a Treasury Department deal to inject $25 billion in federal aid to meet their payroll obligations in the coronavirus crisis.
The terms of the Treasury bailout deal cap executive pay using a formula based on 2019 compensation, which hasn't yet been released in the companies' regulatory filings.
But in 2018, the CEOs of American, Delta, United and Southwest Airlines received annual compensation ranging from $8 million to $15 million.
The 'Big Four' CEOs all receive a substantial part of their compensation in company stock, which has plunged in the crisis, making the exact compensation they stand to take home this year under the salary cap rules difficult to precisely quantify.
Delta CEO Ed Bastian said last month that he will forgo 100 percent of his salary for the next six months, but most of his compensation is in the form of stock
As well, those CEOs who have a cash salary have already accepted salary reductions ranging from 10 percent to 100 percent during the crisis.
Airlines who accept the Treasury bailout will have executive compensation caps in place tied to 2019 salary levels through March 2022.
Officers and employees whose total compensation (including stock) exceeded $3 million in 2019 may not receive total annual compensation that exceeds $3 million plus 50 percent of the excess over $3 million of total compensation received in 2019.
Prior to the bailouts, most of the CEOs of the 'Big Four' US airlines had already agreed to cash salary cuts.
American CEO Doug Parker does not get paid a base salary or a cash bonus.
'He made a change to his compensation in 2015 to be paid only in stock. So he’s already at zero and has been for several years,' a spokesperson told DailyMail.com.
American CEO Doug Parker's (left) all-stock compensation totaled $11,999,517 in 2018
Parker's stock-based compensation totaled $11,999,517 in 2018. American's stock is down more than 85 percent from its peaks in 2018, so Parker's compensation may be significantly impacted.
Delta CEO Ed Bastian said last month that he will forgo 100 percent of his salary for the next six months.
'Our Board of Directors elected to forego their compensation over the next six months as well,' he said in a statement last month.
Bastian made $14,982,448 in total compensation in 2018, of which $3,168,757 was in the form of salary and bonus, and the rest was in the form of stock compensation.
United Airlines CEO Oscar Munoz and President Scott Kirby both said that they will forsake 100 percent of their salaries through the end of June.
In 2018, United CEO Oscar Munoz earned a total compensation of over $10 million
Kirby had been scheduled to take over as CEO of the airline in May.
In 2018, Munoz earned a total compensation of over $10 million and Kirby took home roughly $5.5 million.
Southwest Airlines CEO Gary Kelly announced last month that he will take a 10 percent pay cut during the crisis.
In 2018, Kelly’s base salary was $750,000, but his total compensation neared $8 million.
The funds for the airline bailout were allocated under the $2.3 trillion CARES Act stimulus bill signed into law last month.
According to the statute controlling the bailout, companies receiving funds cannot lay off employees before September 30 or change collective bargaining agreements and must agree to restrictions on buybacks and dividends, which are banned through September 2021.
Southwest Airlines CEO Gary Kelly's base salary was $750,000 in 2018, but his total compensation neared $8 million
Also accepting federal aid were: Alaska Airlines, Allegiant Air, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, and SkyWest Airlines.
The deal includes 10 of the top 12 U.S. carriers. The other two, Spirit Airlines and Republic Airlines, said on Tuesday that they were still in discussions with the Treasury.
The assistance will include a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading airlines.
Major carriers will receive 70 percent of the funds for payroll in cash assistance that will not need to be paid back, while smaller carriers receiving $100 million or less will not need to repay any funds.
The airlines did not want to give up equity, but Treasury demanded compensation for taxpayers.
American Airlines passenger planes are parked last month due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Tulsa International Airport in Oklahoma
This chart shows the number of daily air travelers in the US (blue) as well as that number's change from a year ago (red), based on data released by the TSA
The airlines have little leverage - their business has collapsed as the coronavirus pandemic reduces air travel to a trickle and they face mass layoffs without the federal aid.
The statute gave Treasury the authority to demand compensation for the grants, but did not require it.
Treasury Secretary Steven Mnuchin said the department would work with the airlines to finalize deals 'and disburse funds as quickly as possible.
Airline workers hailed the deal as a way to preserve their jobs in the crisis.
'We are closer than ever to almost a million airline workers knowing they will receive their paycheck and keep their healthcare and other benefits, at least through September,' said Association of Flight Attendants President Sara Nelson, who is widely credited for the idea of aid specifically for payroll.
'At the same time, we were able to rein in the worst corporate practices by tying this aid to restrictions on stock buybacks, executive compensation and dividends.'
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