Aloha Air CEO
The executive is asking
the Bankruptcy Court to
OK enhancements to
his severance package
Aloha Airlines President and Chief Executive David Banmiller is receiving a base salary of $455,400 and could receive severance pay of more than $1.1 million -- double his hiring offer -- if he is not retained by new ownership after the carrier emerges from bankruptcy.
Banmiller's financial compensation was contained in an Aloha bankruptcy filing yesterday ahead of a scheduled hearing Tuesday over a proposed new compensation package designed to entice him to remain at the airline through the company's reorganization.
The proposed modifications of his contract, which don't include any change to his base salary, seek to extend the term of his contract an additional year to Dec. 31, 2010, increase his housing allowance to $90,000 from $59,400 and provide him lifetime first-class travel on Aloha Airlines -- with Banmiller to pay the applicable taxes.
Aloha said Banmiller has little job security now and that given his expertise in airline restructuring, it's reasonable to believe that he has been, and will continue to be, recruited by other employers.
"By working tirelessly to attract equity investment to save the airline and the jobs of its 3,600 employees, Banmiller may be increasing the likelihood that he will be replaced as president and chief executive officer should a new investor assume control of the airline," the filing said.
Banmiller, who currently is not receiving a housing allowance because he lives in corporate housing, also own 5 percent of stock in parent company Aloha Airgroup Inc., according to the filing. In addition, Banmiller is provided with a car and is eligible for a success fee after the company emerges from bankruptcy.
Hawaiian Airlines trustee Joshua Gotbaum, who last month brought that carrier out of more than two years in bankruptcy, also is entitled to a success fee and is expected to file for one within the next 10 days.
Gotbaum received annual base pay of $600,000, plus a $10,000-a-month housing allowance, when he was with Hawaiian.
The salary of new Hawaiian CEO Mark Dunkerley, who was making $415,000 as president and chief operating officer of the airline, has not been publicly disclosed yet in a Securities and Exchange Commission filing.
The previous Hawaiian Chairman and CEO, John Adams, was making $600,000 a year.
Banmiller is making slightly more than Glenn Zander, the CEO he replaced.
Zander was receiving $425,000 a year, plus a $75,000 annual housing allowance and a car. Zander also received 180,000 stock options.
A study of 10 other airline CEO salaries showed that base pay ranged from $339,835 at Southwest Airlines Co. to $865,508 at Continental Airlines Inc., according to the filing that based its information on company proxies. In many cases, those salaries were enhanced by hundreds of thousands in bonuses and stock compensation, the filing showed.
Banmiller, hired in mid-November a month before Aloha filed for bankruptcy, originally was hired for $562,222 with an additional housing allowance of $66,000. However, he never received that base salary because of a 10 percent pay cut that was taken off the amount in conjunction with similar cuts taken by other Aloha executives.
Another 10 percent later was taken off the reduced amount of 506,000 to leave him with his current base salary of $455,400.
Similarly, the $66,000 housing allowance was reduced at the outset by 10 percent to $59,400. But Banmiller hasn't received that amount because the corporate housing he's living in now is paid directly by Aloha at a rate of $3,500 a month.
If Banmiller leaves Aloha after the airline emerges from bankruptcy due to "certain triggering events," he will receive two years pay at the original offer rate of $562,222.
But if he involuntarily leaves during the reorganization period, his administrative claim against the airline will be limited to two years of pay at his current base pay of $455,400.
Banmiller will not be entitled to an administrative claim if he leaves the airline voluntarily during the reorganization, the filing showed.
The proposed modifications in Banmiller's contract also prevent him from collecting a windfall at the airline's expense in that if he obtains new employment, the annual salary earned by him at the new employer will be adjusted so that it does not exceed the annualized amount of the severance benefits he would receive from Aloha.