A cultural shift at JetBlue…
A year has passed since JetBlue (JBLU) melted down following an ice-storm that crippled its operations. While the company replaced some top managers, including founder David Neeleman, who still serves as non-executive Chairman, the stock price has yet to recover.
So you can imagine my surprise when I spotted this 8-K from late Friday giving new employment contracts to CEO David Barger, who replaced Neeleman, and Chief Operating Officer Russ Chew. Part of the problem is that the company didn’t include the actual employment agreements in the filing — just a summary. But the other oddity is that Chew, a former FAA official and American Airlines executive, is getting a $12,000 a month housing allowance through the end of 2009, which based on a review of earlier filings, appears to be a first for the 8-year old company. Even in NYC, $12,000 a month still buys you a pretty nice crash pad . To be fair, the company had disclosed that Chew was receiving a housing allowance in this earlier 8-K (as well as a tax gross up to cover the housing), but they never gave a dollar amount for the perk until Friday.
Friday’s filing also substantially increases the salaries for both job titles. When Barger was chief operating officer, he was making $200K a year. His new salary as CEO is $500K, or double what Neeleman was making when he had the same job. And Chew, who replaced Barger as COO, is making $400K plus the housing allowance and gross-up.
The old Jet Blue used to focus on compensating its top executives with lots of options, instead of hefty salaries, which seemed to foster more of a “we’re all in this together” attitude, even among front-line employees. As someone who flies JetBlue pretty regularly, it’s become increasingly clear over the past few months that that culture has clearly changed, and not for the better.