Other industries like the movie theater industry, which has more than 150,000 workers, are also in serious trouble as cash flow goes to zero and hourly workers are being told to stay at home. Now the economic impact of the coronavirus outbreak have created a domino effect that has not yet been stemmed by the coronavirus stimulus bill passed by congress.
With unemployment spiking wildly from a few hundred thousand to 3.3 million and then 6.6 million in the span of two weeks, many CEOs have responded by taking a pay cut.
To be clear, these pay cuts are hitting their base salary, which is often a very small percentage of their overall compensation. For example, Delta CEO Ed Bastian’s base salary is $891,667, according to the latest proxy statement from the company. That’s 6% of his $14.9 million total compensation package — which is based on stock awards, option awards, and other types of compensation that aren’t connected to the company’s stock price.
This is due to incentive compensation; Delta’s board wants the share price to go up, so it aligns Bastian’s compensation accordingly by giving him lots of shares instead of a big base salary. Still, cutting the base salary to do something to stem the financial bleeding is likely appreciated by his workforce.
Here’s a list of the cuts so far:
Airlines and transportation
Delta (DAL) CEO Ed Bastian: “As I mentioned last week, I’ve cut my own salary by 100 percent through the next six months. Our Board of Directors elected to forego their compensation over the next six months as well.”
Alaska Air (ALK) CEO Brad Tilden cutting base salary to zero.
Marriott (MAR) CEO Arne Sorenson has joined the airlines in taking a pay cut, as the hotel industry revenues have been slammed as well. “I will not be taking any salary for the balance of 2020 and my executive team will be taking a 50% cut in pay,” Sorenson said.
As GE (GE) lays off 10% of its aviation workforce, CEO Lawrence Culp is foregoing his “full” salary. It is not clear whether this means his full base salary or his total compensation. Furthermore, David Joyce, vice chairman of GE and president and CEO of GE Aviation, “will forgo half of his salary,” the company announced. On April 16, other executives under Culp pledged to forego 25% of their salaries and vice presidents 10%.
Disney (DIS) CEO Bob Chapek will be taking a 50% pay cut, according to the Hollywood Reporter. The company said all VP level executives will get a 20% reduction in salary starting April 5, according to Variety.
Columbia Sportswear CEO Tim Boyle has reduced his $3.3 million salary to $10,000 to support affected employees after the company closed stores.