Executive at my hometown airline walks the talk
But now times are tough, just like they are for every airline, thanks to high fuel prices. What can really be done about it? The business model of the airlines simply can't be profitable with fuel prices as they are. So last week Midwest Airlines announced that the company would be cutting its routes (and therefore its employees) in half. The remaining employees will be asked to take pay cuts.
In light of all the cuts, the company's CEO, Timothy Hoeksema, announced that he would personally take a 40% pay cut. The rest of the upper-level executives will be taking 25% pay cuts. Employees in management positions will be taking pay cuts of 11% to 17%. Front line employees will see cuts of 5% to 10%, although pilots will have larger cuts because their pay scale has been above the industry norm.
I'm not one to complain about the pay of executives of companies. I do believe that it takes a high level of skill and experience to run a large company well, and that the market works pretty well to determine what CEOs will be paid. However, I am impressed by the fact that this CEO is taking a hit like the rest of his company's employees. It only seems fair that during a time when the company's survival is on the line, everyone should help save the company. Another great move by a great airline.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.