Mesa gets creative with yet another perk…
Ever since we first footnoted Mesa Air (MESA) back in 2004, we thought this was a company that seemed to be more interested in enriching its top executives than delivering for shareholders. The hefty retention bonuses were one clue. The related party transactions, like this one that we footnoted in 2005 were another. Since 2006, the stock has been in something of a free-fall — words you don’t want to associate with an airline company.
So you can imagine my surprise at Mesa’s latest serving of perks, from the proxy filed late Friday. Chairman and CEO Jonathan Ornstein is now getting $3,000 a month for “discretionary business investigation purposes”. What exactly is that? Private investigators for some sort of due diligence? Bankers? Attorneys? And why are Mesa’s investors learning about this unusual perk for the first time when Ornstein has been in the position for the past 10 years?
The proxy isn’t particularly clear on either point. But in light of the news today that the thing that brought down Gov. Eliot Spitzer was unusual payments of cash to various shell companies, it seems like Mesa owes its shareholders a little more detail.
UPDATE: Mesa’s general counsel, Brian Gillman, called this morning to provide some additional perspective on this oddly named perk. Though the words that Mesa is using to describe the perk are new, the perk itself is not. “It looks like something different, but it’s actually not,” Gillman said. In last year’s proxy as well as in previous years, it was called a “non-accountable expense allowance” which Gillman said has been in place for many years. A quick scan of earlier proxies shows that the word allowance was first used in January 2004. Gillman added that Ornstein pays taxes on this amount and that it’s just a way for him to account for some business expenses without having to produce every single receipt. Footnoted.org is always happy to correct something when our interpretation of the filings isn’t quite right.
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Posted in Tags: CEOs, frequent flyers, Friday filings |
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March 11th, 2008 at 10:11 pm
With 40 years in the aviation industry I’m comfortable I know a little bit about what is going on.
MESA is essentially a “broken” airline that trys to run on a culture of fear and rewards for loyalty to “the Ornstein cult”.
This is the “cult” that allowed if not encouraged “fact finding” in the Hawaiian market that the courts ultimately determined to be illegal. This is the cult that took the creation of an aviation pioneer (MESA founder, Larry Risley) and ran it into the ground. This is the cult that has returned virtually nothing to long term investors.
I made the mistake of buying a position in MESA a couple of years back at a few bucks a share; decided to sell at about $9 – 10 when the China and Hawaiian venture was piled on to deteriorating financial results; glad I did. If I were a long term holder, I would be sitting on the same $3 per share.
Perhaps the $3000 monthly descretionary allowance pays for Ornstein’s favorite chinese food on his junkets to the Orient…or something else not revealable outside “the cult”!
March 12th, 2008 at 6:59 am
I agree with your point completely. Companies must disclose where and how their money is being used , this will not only build confidence in existing investors but also a prospective invesotor . Liked your blog, good work.