WASHINGTON -- So how much does the Big Guy make? You'd expect the
chief executive officers of major airlines to be pretty high up
there, along with the top guys at some of the brand-name hotel and
Internet companies, but how high is high?
To shed some light on the question, Travel Weekly commissioned a
survey of executive compensation for the chief executive officers
of some of the industry's better-known public companies.
Top Five Data Services, a compensation consulting firm in
Fremont, Calif., compiled the data and reported that Continental
chairman Gordon Bethune was, by far, the industry's highest paid
CEO among the companies surveyed, with a 1999 salary and bonus
exceeding $7 million.
Bethune's compensation last year was an anomaly, in that it
included a retention bonus voted by the Continental board in 1998
for all the company's top officers, following Northwest's
acquisition of a major stake in the airline.
Without the $6 million in bonuses, Bethune's compensation would
have been more than $860,000, still the highest base salary among
major airlines' top officials.
Overall, the highest base salary among the airline, cruise and
hotel companies surveyed was the $1 million paid to Starwood chief
Top Five president Jay Edelman said, "Our review did not really
surprise us or reveal pay practices that were significantly
divergent from other industries we have studied."
Chief executives at this level often receive performance or
other bonuses that can double or triple the base salary, and
bonuses were hefty at 10 of the 13 travel and hospitality companies
surveyed by Top Five.
Edelman said, "Profitable companies in all industries are
routinely paying bonuses exceeding 100% of base salary, presumably
for above-target performance.
"And all of this is occurring while total direct compensation
(which includes stock-based incentives) is reaching levels
unimaginable 10 years ago."
With bonuses included, Sternlicht's total cash compensation came
to more than $2.2 million, second-highest in the group behind
In percentage terms, Carnival chief Micky Arison received the
second-largest bonus after Bethune, measured at 299.4% of the base
These totals exclude stock options and various deferred
In one odd twist of fate, the chief executives of the two
largest airlines, United and American, received base compensation
only slightly above the average for the group, with no bonus. Both
are relatively new on the job.
Donald Carty became chairman and CEO in mid-1998, and James
Goodwin assumed those titles at UAL in mid-1999.
The only other airline CEO in the group with no bonus last year
was TWA chief William Compton, who was appointed to the position in
Edelman noted that "five out of the 13 companies in this group
had a new CEO within the past two years. That's over one-third.
"It's not easy to replace executives at that level, particularly
in the overheated employment environment we're in. Considering the
disruptions and costs associated with replacing an exec at that
level, most companies (and stockholders) are content to pay what
look like fairly rich pay packages, as long as results (e.g. the
stock price) hold up."
Top Five compiled the data from public documents filed by
publicly traded U.S. corporations. This explains the absence of
some prominent foreign and/or closely held corporations such as
Royal Caribbean, NCL and Hyatt.