Do the key performance indicators support what they earned last year?
Let me just start by saying i am no compensation expert, I don't know how the Airline CEO compensation is proportionally adjusted based on targets and scorecards. I am sure all of them earned their dimes by working hard. However I do like to look at data from several angles, and wanted to share what i thought would be good insights for your brain cells to consume.
First let's look at the Top10 US Airlines CEO's and how much revenue their airlines generated in 2022. Next we will also overlay how much compensation they made (see footnote) as reported to the street.
Some Key insights that jump out at me, assuming the data is correct.
Observation #1:
Delta generated the most revenue in 2022 to the tune of $50 billion, approximately $1 billion more than American Airlines. Yet Robert Isom, the American CEO was awarded less than half the compensation as Ed Bastian, the Delta CEO.
Observation #2:
Scott Kirby, the United CEO was awarded the highest compensation of the Top 10 Airline executives in the US. He received a wholesome $10.6 million in 2022, yet his airline generated less revenue than American and Delta. In fact United generated nearly $6 billion less than Delta and Kirby earned more than the Delta CEO.
Observation #3:
John Redmond the Allegiant Air CEO made a whopping $6 million compensation last year allegedly, whilst his airline generated the lowest 2022 revenue of the top 10 airlines. Allegiant Air made $2billion in revenue. To put this in perspective, the Alaska Airlines CEO, Ben Minicucci earned $3 million in comp last year which is half of the Allegiant CEO, but generated twice the revenue as Allegiant.
The chart below is a better visual of CEO comp v revenue.
Performance Metrics
Using data available in the public domain and my own lens on a score card for dummies. I took three key performance indicators to evaluate how each of the airlines performed in 2022.
Flight disruptions as reported by US Department of Transport website (disruption includes cancellations, delays and diversions)
Stock price performance in 2022 as reported by Forbes in January 2023
Customer satisfaction score as reported by J.D Powers. I only included scores for economy class to get an apple to apples comparison
Each of the three category scores have been converted to a heat map, as such the warner the color the worse the scores, the greener the color the better the score, with the yellows in between the best and worst scores.
Observation #4:
Delta CEO Ed Bastian shows the most greens for the 3 categories so is the standout CEO amongst his peer group as the top performer even though his paid salary was less than Scott Kirby at United.
Observation #5:
Southwest CEO Bob Jordan is trending Green to light yellow for the 3 metrics, and is best in class for Customer Satisfaction scores which for me is a very important metric, and seems to justify his $4.8 million comp.
Observation #6:
Allegiant CEO, John Redmond who earned $6 million in 2022, yet his airline performed poorly in the 3 metrics and worst in the stock price category, which underscores observation #3.
Diversity, Equity & Inclusion
If we were to also look at this group of CEO's through the Diversity Equity & Inclusion (DEI) lens, these organizations would all score low. None of the CEO's are women or of ethnic diversity. Allot more work to do in this department for all of these organizations if they are to move the dial in the right direction.
note: compensation comparison used for the CEO's was taken from the Skift article, and only the comp actually paid was used instead of the all in comp which normally would include equity.
09/22/2023 - American Airlines CEO, Robert Isom receives a new bonus.
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