WASHINGTON -- Salaries paid to the chief executives of publicly
traded travel technology and distribution companies show
considerable variation, owing to the many differences in the size
and nature of these companies, according to a Travel Weekly review
of chief executive officer compensation conducted by Top Five Data
Services.
Last week's installment showed that chief
executives among the major airlines, for the most part, are in
roughly the same salary bracket, but the same cannot be said for
the handful of publicly traded companies in travel technology and
distribution, a group that includes a number of recent start-ups
and spin-offs, and one true corporate giant, American Express.
Not surprisingly, American Express' chief executive officer
Harvey Golub is the highest-paid chief executive in this group,
receiving nearly $2.4 million in salary and bonuses last year.
That is more than the average airline chief executive officer
and nearly twice the total for the second-highest-paid chief
executive on the list, Galileo chairman James Bartlett.
American Express, of course, is essentially a financial services
company, but it is included here because it also happens to be the
world's largest travel agency.
It is one of only a handful of publicly traded travel retailers
whose executive salaries are made public to the investment
community.
The list also includes Navigant, the family of corporate travel
agencies that was spun off from US Office Products in 1998.
On-line travel agencies Expedia and Travelocity were partly spun off from their
parents, Microsoft and Sabre, in 1999 and 2000, respectively.
Sabre, in turn, was spun off from its parent AMR earlier this
year.
Its archrival in the CRS field, Galileo, is still part-owned by
United and other airlines. Hotel Reservations Network went public
last year.
In a group this diverse, a wide disparity in salary and bonus
payments is to be expected.
Top Five president Jay Edelman said the "unifying theme," if
there is one, could be the desire of investors to attract talented
managers.
"Once investment money pours into a start-up, the first thing
that the investors insist on is installing experienced executives
in the top jobs," Edelman said.
A problem for many start-ups, however, is that most experienced
executives likely have a "large chunk of stock options waiting to
vest in their current employer that will likely be unavailable to
them if they leave," he said. That means cash-starved start-ups
need to offer even larger option packages to attract top
talent.
Salary and bonuses, in other words, don't tell the whole
story.
Edelman noted that American Express' Golub also received "$1
million in restricted stock and a payout from a long-term incentive
plan worth another $2.9 million."
In addition, public records show that "Mr. Golub exercised
options in 1999 for a net gain [at least on paper] of about $37.8
million. As of the end of last year [even after option exercises],
his vested options were listed as having a net value of $68
million," Edelman said.
At the other extreme, Edelman noted that Priceline's chief
executive officer, Richard Braddock, received a base salary of
$300,000 and no cash bonus.
According to Edelman, "he took the job at then unknown Priceline
in 1998 and received about 10% of its total shares outstanding. The
stock has tanked big time in 2000, but at the end of 1999, at least
on paper, Mr. Braddock's stock options [all vested] were worth a
net of $296 million."
He registered to sell up to $29 million of the stock this year.
His total sales thus far have reached $16.7 million.
Top Five compiled the data from available records for U.S.
public corporations, which explains the absence of a number of
prominent but closely held firms in travel distribution, such as
Carlson Wagonlit Travel, Rosenbluth, Mark Travel Corp. and
others.
This also explains the absence of the likes of Amadeus and Uniglobe.com,
which are traded in other countries. 