January 23, 2023
Executive Comp Implications of Southwest’s Holiday Meltdown
Fortunately, I wasn’t one of the thousands of travelers who were stranded by Southwest’s scheduling meltdown over the holidays, but if I was, questions about the structure of the company’s executive compensation programs wouldn’t have been high on my list of things to worry about. I guess that’s why I’m not a Senator, because those questions featured prominently in a letter that Sen. Alex Padilla (D-Cal.) sent to the airline earlier this month. Here are the specific inquiries Sen. Padilla made around executive comp issues:
Is executive compensation in any way tied to flight cancellation rates and consumer satisfaction? What is the estimated impact of this holiday season on top Southwest executives’ compensation? Is the company considering any clawbacks of executive bonuses or other compensation based on the failures that occurred during the 2022 holiday travel season?
In hindsight, my failure to consider the possible executive compensation side of the equation just confirms that I’m pretty clueless. The Southwest situation is just another reminder that any highly publicized corporate crisis is going to result in the media and politicians emphasizing the executive comp side of the equation. There’s just too much raw meat there to expect them to resist.
– John Jenkins