JetBlue TrueBlue - JetBlue CEO compensation

I remember last summer, there was discussion about Mr. Barger's self pay cut. He's done some amazing things for the company, and here's a recent article from Forbes on his compensation:

http://www.forbes.com/feeds/ap/2009/04/10/ap6279465.html

So where is the pay cut in there? Sounds like he's doing quite well, both on the base salary bit and on the additional comp.

So where is the pay cut in there? Sounds like he's doing quite well, both on the base salary bit and on the additional comp.

The pay cut was in 2007; this is for 2008. He's doing well, but definitely modest for that position. Also, most of his compensation came in the form of a performance cash bonus, as well as perks such as insurance and stock.

The insurance perk was $12K. The performance bonus of $250K seems particularly strange considering the company lost millions of dollars.

The insurance perk was $12K. The performance bonus of $250K seems particularly strange considering the company lost millions of dollars.

Strange according to which metrics? The company lost millions, yes. But let's keep in mind that we're talking about the airline business. Earnings were not nearly as bad as they could have been given the circumstances...

Strange according to which metrics? The company lost millions, yes. Yup, that is the metric I was using.

Earnings were not nearly as bad as they could have been given the circumstances...How do you know? I don't have any qualms about paying out the base salary but the fact that anyone thinks a performance bonus is due just seems foreign to me.

I guess I just need to get a job in the airline industry, where CEOs get rewarded simply for limping through to another year rather than generating profit. Yes, I know that it isn't only jetBlue that does this, but it is strange to me.

The insurance perk was $12K. The performance bonus of $250K seems particularly strange considering the company lost millions of dollars.

Keep in mind that not all bonuses are paid upon financial performance of the company. A lot CEO and top executives take their bonuses in lieu of higer salaries mostly b/c of the tax implications (from what I understand).

Keep in mind that not all bonuses are paid upon financial performance of the company. A lot CEO and top executives take their bonuses in lieu of higer salaries mostly b/c of the tax implications (from what I understand).
Sortof, but that's not what I was getting at.

Barger took home a base salary of $372,917 in 2008, compared with $200,000 a year earlier.

He was awarded a performance-base cash bonus of $250,000, compared with $50,000 in 2007.

Barger also received perks - including life insurance premiums and company contributions to his 401(k) plan - valued at $12,708, versus $7,270 the year before.
....
He was granted restricted stock that was valued at $250,000 on the day it was granted, Feb. 14.
The only part I am questioning is the $250K "performance" bonus (and it should be -based, not -base, I think). Was heading a company that lost millions of dollars sufficient to deserve a quarter million dollar bonus?

The only part I am questioning is the $250K "performance" bonus (and it should be -based, not -base, I think). Was heading a company that lost millions of dollars sufficient to deserve a quarter million dollar bonus?

It would be nice if these articles would detail at what the performance is based on. Was it financial? RASM? Load Factors? How many bags of Blue Chips he ate?

These are usually measured versus average airline industry profit and loss statements.

If a carrier exceeds the average industry performance (i.e. it lost a smaller percentage of money than the industry average) the bonuses kick in.

While this practice would certainly merit our disapproval, Dave Barger's bonus pales in comparison to the bonuses received by Leo Mullin while he was CEO of Delta.

While he received millions of dollars in bonuses, DL was losing billions of dollars, laying off tens of thousands of employees, pilots were taking a 30% pay cut, and ultimately DL landed in bankrputcy court.

Yet, somehow DL did well enough to exceed average industry performance.

These are usually measured versus average airline industry profit and loss statements.

If a carrier exceeds the average industry performance (i.e. it lost a smaller percentage of money than the industry average) the bonuses kick in.

While this practice would certainly merit our disapproval, Dave Barger's bonus pales in comparison to the bonuses received by Leo Mullin while he was CEO of Delta.

While he received millions of dollars in bonuses, DL was losing billions of dollars, laying off tens of thousands of employees, pilots were taking a 30% pay cut, and ultimately DL landed in bankrputcy court.

Yet, somehow DL did well enough to exceed average industry performance.

Hold ona second.. I thought JetBlue was "different." Why is it ok to now compare Berger to Mullin of Delta? Aren't B6 and the legacy carriers just two different animals? This is the argument when it comes to B6's deficiencies (like its mileage program, interlining, reciprocity, etc.). Now we're comparing B6 to legacies for justification of CEO packages?

I ask in all honesty, not to be a jerk. In what areas can we say JetBlue is indeed different and in what areas are they the same as all others?

While this practice would certainly merit our disapproval, Dave Barger's bonus pales in comparison to the bonuses received by Leo Mullin while he was CEO of Delta.

While he received millions of dollars in bonuses, DL was losing billions of dollars, laying off tens of thousands of employees, pilots were taking a 30% pay cut, and ultimately DL landed in bankrputcy court.


Mullin was CEO 1997- Nov. 2003. Pre-9/11 there was no question DL outperformed the domestic industry on financial metrics. Further, compensation 1997-2003 lacks much relevance to 2008 pay.

I ask in all honesty, not to be a jerk. In what areas can we say JetBlue is indeed different and in what areas are they the same as all others?
They specifically used comparisons to other airlines in the USA as a justification to jack up their pay scale for executives, according to the article linked above.

It is absolutely possible to have a well run and functional company without paying the CEO bushels of money. Just ask Costco.

They specifically used comparisons to other airlines in the USA as a justification to jack up their pay scale for executives, according to the article linked above.

It is absolutely possible to have a well run and functional company without paying the CEO bushels of money. Just ask Costco.

It's rare these days, but I agree. If the airline isn't performing, why should Berger get a bonus? Relative to other legacy airlines just screams "we're not all that different at the end of the day."

Mullin was CEO 1997- Nov. 2003. Pre-9/11 there was no question DL outperformed the domestic industry on financial metrics. Further, compensation 1997-2003 lacks much relevance to 2008 pay.I agree that Mullin's example pre-dates the current outrage over CEO compensation, but the facts are--if anythinhg--even more outrageous than most of the current bonus outrages.

In 2002, Delta had just suffered $2.4 billion in losses over the past 24 months, had laid off thousands of workers, had entered into a new CAB with their pilots that featured a 30% pay cut.

At the same time Mullin was paid a total of $13 million in 2002.

He was credited with 25 years’ service after working only 3 years. Additionally, DL kicked in $8.24 million to fund Mullin’s benefit, placing it out of reach of creditors in the event of bankruptcy, as well as to pay any taxes owed for his handsome retirement package.

On the other hand--and deeply shockingly--Delta announced plans to convert its defined benefit plan covering most workers to a cash balance plan, saving $500 million by cutting in half pensions of workers closest to retirement.

Shortly thereafter, DL was in bankruptcy and Mullin, having "exceeded average industry performance," was laughing all the way to the bank.

P.S.: Following a brouhaha over this incident, Mullin did return the $1 million bonus he "earned" in 2002. But he kept the rest of his $12 million compensation, and today enjoys a handsome tax-free retirement package worth $16 million paid for by the shareholders, employees and customers of DL.

Oh, Mullin worked at Delta for a total of six years.