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Southwest Air Sets Pay For Departing ExecutivesSouthwest Airlines will pay Herb Kelleher and Colleen Barrett, its chairman and president, respectively, $400,000 a year plus a possible bonus for the five years beginning in 2008, when the two will give up their titles and board seats but remain employees. Southwest also said, in a Securities and Exchange Commission filing, that Mr. Kelleher, 76 and a founder of the airline, was granted options to buy 60,000 Southwest shares and that Ms. Barrett, 62, was granted options to buy 75,000 shares. The pay packages are part of a management transition plan that includes a contract for the current chief executive of Southwest, Gary C. Kelly, 52, through Feb. 1, 2011, at a salary of $424,065 plus possible bonuses. He received options to buy 150,000 shares. Southwest said yesterday that Mr. Kelleher plans to retire as executive chairman and give up his board seat next May. Ms. Barrett, who was once Mr. Kellehers legal secretary, also plans to retire as an executive and board member next May. No decision was made on filling the chairman and president positions. While the moves represent the end of an era that began when Southwest started flying 36 years ago with Mr. Kelleher as its feisty outside lawyer, they also promise management continuity as the airline faces a number of difficult challenges. Fuel prices are rising and Southwests hedges against that trend are declining, leaving it increasingly exposed alongside other airlines. Its labor rates are among the highest in the industry, after steep cuts by network airlines like United Airlines and American Airlines, reducing Southwests cost advantage. And for competitive reasons Mr. Kelly has been forced to consider adding service features, like assigned seats and in-flight entertainment, to what has been a uniquely simple operation. In a light-hearted conference call with reporters, Mr. Kelleher, who is known for his hard living, said his airline legacy would be, I consumed more Wild Turkey and cigarettes than anybody in the industry. He did say, though, in answer to a question, that Southwests board, which met yesterday morning, did not push him or Ms. Barrett out. Nor was there a need to make room for promoting others, he said. There wont be multitudinous changes, Mr. Kelleher said. He lavishly praised Mr. Kellys management. In an unusual arrangement, he and Ms. Barrett will remain full-time Southwest employees, though not officers, for five years after leaving the board. Their duties are not yet clear. Ms. Barrett has led customer service initiatives and is the self-described hammer on those issues at Southwest. Shes our company mom, Mr. Kelly said, and I cant imagine that will ever change. Tag CloudExternal InformationAdditional InformationFor One Company, Role in Medicare Experiment Has Hurt Stock...GMAC Exploring Sale of Some Parts of Mortgage Lender... Game Group notches up big numbers in annual battle of the high street... Fed ‘caught off guard’ by rate of US slowdown... Where Am I?News Main Page - Business - Southwest Air Sets Pay For Departing Executives |
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