Hundreds of companies across all industries and around the world have announced in recent days drastic cuts to the salaries of their senior executives as one way to reduce the unprecedented financial blow caused by the coronavirus pandemic. Some executives are even graciously foregoing salaries to help their employees.
The airline, restaurant, hospitality, and transportation industries have been especially hard hit. Below is a list, broken down by industry, of companies that have announced executive pay cuts. The list is by no means comprehensive, but rather provides a glimpse into what emerging impact the coronavirus is just now starting to have on decisions around executive compensation.
Among U.S. airlines, Delta CEO Ed Bastian announced in a March 13 memo he will be foregoing 100 percent of his salary, effective immediately, for the next six months. United, too, announced it has cut its corporate officers’ salary by half and reduced CEO Oscar Munoz and President Scott Kirby’s salaries to zero. Allegiant Travel announced Chairman and CEO Maurice Gallagher and President John Redmond also aren’t taking salaries, while other officers of the company will take a 50 percent salary reduction.
Alaska Air announced it will reduce officer pay through Sept. 30 as follows: a 100 percent pay reduction for both CEO Brad Tilden and President Ben Minicucci; 50 percent for the president of Horizon Air; 30 percent for EVPs and SVPs; and 20 percent for VPs and MDs. Alaska Air’s board of directors also voted to take their own cash retainers to zero through Sept. 30.
Executives of other U.S. airlines to announce pay cuts include Southwest Airlines CEO Gary Kelly, who said in an internal memo to employees that he will take a 10 percent cut in pay. JetBlue Airways CEO Robin Hayes and President and Chief Operating Officer Joanna Geraghty announced March 18 they will both reduce their pay by half during this crisis. And Spirit Airlines CEO Ted Christie announced he will reduce his salary by 30 percent, while other senior executives, vice presidents, and board of directors will reduce their salaries as well.
In the United Kingdom, Virgin Atlantic CEO Shai Weiss announced he has extended his 20 percent pay cut to the end of 2020, with the executive leadership team experiencing a decrease of 15 percent for the same period. Other international airlines that have announced executive pay cuts include Air New Zealand; Sweden’s Scandinavian airlines SAS; Thai Airways International; El Al Israel Airlines; Singapore Airlines; Philippines’ budget airline Cebu Air; and India’s budget airline IndiGo, to name a few.
Elsewhere in the world, Australian airline Qantas announced March 19 that its “senior group management executives and the board have increased their salary reductions from 30 percent to 100 percent until at least the end of this financial year, joining the chairman and Group CEO in taking no pay. Annual management bonuses have also been cancelled.”
Marriott International CEO Arne Sorenson announced in a public video message to employees that “both Mr. Marriott and I will be not be taking any salary for the balance of 2020, and my executive team will be taking a 50 percent cut in pay. In terms of our business, COVID-19 is like nothing we’ve ever seen before. For a company that’s 92 years old, that’s borne witness to the Great Depression, World War II, and many other economic and global crises, that’s saying something.”
Hyatt announced plans to establish a global “Hyatt Care Fund,” which will be “seeded by 100 percent of Hyatt leadership team’s salary reductions as an initial contribution,” the company announced. Both CEO Mark Hoplamazian and Chairman of the Board Tom Pritzker are forgoing 100 percent of their salaries, while the rest of Hyatt’s senior leadership team is taking a 50 percent salary cut through the end of May.
“The proceeds of this fund will be distributed to those colleagues with the most pressing financial needs due to loss of income,” Hyatt announced. “Our ultimate goal is to emerge in a position of strength coming out of this crisis, with our world-class teams as intact as possible across the global Hyatt family.”
The co-founders of ridesharing company Lyft, John Zimmer and Logan Green, pledged to contribute their salaries through June to support efforts to help their driver community. As one of those initiatives, Zimmer and Green established a voluntary LyftUp Driver Task Force for drivers who “would like to help neighbors get to grocery stores, workers to hospitals, and caretakers to their jobs.”
Boeing announced this month CEO Dave Calhoun and Board Chairman Larry Kellner will “forgo all pay until the end of the year.” And General Electric announced it will be making several cuts in salary: “Starting April 1, David Joyce, vice chairman of GE and president and CEO of GE Aviation, will forgo half of his salary,” GE Chairman and CEO Lawrence Culp wrote in a March 23 letter to employees. Culp said he, too, will forgo his full salary for the remainder of 2020.
In the technology industry, Sabre announced President and CEO Sean Menke will be taking a temporary 25 percent reduction in base pay compensation.
Real-estate investment trust company Ashford Hospitality Trust announced in a Form 8-K that, as of March 21, the base salary of CEO Monty Bennett and CFO David Kimichik, along with other executive officers, has been temporarily reduced by 15 percent and will continue until Bennett has determined that the company is in “a healthy financial position.” Additionally, the annual cash retainer for each non-employee director serving on its board of directors will be temporarily reduced by 25 percent.
More to come
Again, this is by no means a comprehensive list. Several other companies across all industries have made similar announcements, and it’s likely this trend will continue to grow.
As it does, keep an eye on corporate compliance officers also taking cuts. One example: The general counsel and CCO of Illinois-based gaming operator Accel Entertainment, Derek Harmer—along with the company CEO and CFO—will be forgoing 100 percent of his salary until the company resumes operations.
Pearl Meyer, an executive compensation consulting firm, is in the process of conducting a broader survey on this topic, and its preliminary results have found more than half of companies among its more than 300 respondents have adjusted executive salaries in 2020. Its complete survey results and analysis will be published on March 30.