Southwest Airlines CEO, Gary Kelly has voluntarily cut his 2009 base salary by 10 percent citing the company’s first-quarter results, the low-cost carrier announced in a proxy statement, filed with the Securities and Exchange Commission on Friday.
The Dallas-based company’s compensation committee had already decided against offering Mr Kelly a pay increase this year given the “general economic outlook.”
The company’s three-person committee decided to boost Mr Kelly’s base pay to USD$465,000 last July citing his added duties as chairman of the board and president of Southwest.
This meant that Kelly earned nearly USD$1.7 million last year, (including bonus payments and other compensations) which is more than USD$378,000 that he made in 2007.
In 2008, Chief Financial Officer Laura Wright earned more than USD$689,000, including bonus and other payments, a decline from the more than USD$700,000 she took home the year earlier.
Southwest, widely known for its thriftiness, said it had chosen to award bonuses to reward its executives for the company’s 36th year of profitability and the success of its fuel hedging programme, which contributed to cash savings of almost USD$1.3 billion in 2008.
The airline experienced a profitable year in 2008 despite reporting losses in the second half.
Those declines have continued into 2009 when on Thursday, Southwest posted a quarterly loss of USD$91 million as both leisure and business travel slumped and the value of the airlines fuel hedging programme fell.
The company is currently offering an employee buyout programme and most senior managers are accepting a pay freeze.