Thursday, July 3, 2008

Will Midwest CEO return his $10 million windfall?

Last week Midwest Airgroup Inc. announced that it would seek pay cuts of 45% to 65% from its pilots, 34% to 56% from flight attendants and 10% and 5% for maintenance technicians and professional staff. Hundreds will be laid off.

A few days later, Midwest CEO Timothy Hoeksema declared that he would cut his own pay by 40%. Other senior vice presidents' pay would be cut by 25%.

Hoeksema's decision to reduce executive pay is designed to communicate that Midwest's management will share in the sacrifices required to keep the struggling airline company from going bankrupt.

If Midwest's top brass, who make at least ten times more (in total compensation) than their pilots and other employees, really want to share the pain, why aren't they taking bigger percentage pay cuts than their employees?

And why doesn't Hoeksema voluntarily return the $10.3 million windfall he received when Midwest was purchased less than a year ago? And demand that the senior vice presidents who received between $991,000 and $1.6 million do the same?

The $15 million in stock options that Hoeksema and the senior vice presidents cashed out when Midwest was sold to a private equity firm, TPG Capital LP, would buy an awful lot of jet fuel even at today's sky high (pardon the pun) prices.

The failure of Hoeksema and his lieutenants to match the pay cuts demanded from their employees, much less return their other worldly bonuses, makes it clear that their willingness to sacrifice is little more than a public relations ploy.

Despite management's posturing, its cookies for the executives and crumbs for Midwest's employees.

1 comment:

Anonymous said...

What a tragedy that Hoeksema chose to line his own pocket rather than permit Midwest to merge with AirTran. AirTran has responded by jumping into the Milwaukee market big time. At this point it appears that AirTran will end up with Midwest's routes and passengers without having to lay out any cash! Hoeskema's performance was a world-class choke job by a complete idiot!