In this episode of the Skift Travel Podcast, hosts Sarah Kopit and Seth Borko discuss the topic of executive compensation in the travel industry. They delve into the case of Airbnb CEO Brian Chesky, whose innovative pay package could potentially turn into a multibillion-dollar reward over a decade. This extreme amount is reflective of the value of the company and the performance targets set for Chesky.
Chesky’s pay package stands out due to its unique structure, which includes a salary of just $1 per year and a large number of stock shares tied to performance goals. This aligns his incentives with the success of Airbnb as a company. While some may question the ethics of billionaires existing, Borko argues that Chesky’s potential wealth is a result of his company’s success and not simply a handout of cash.
Comparing executive compensation in the U.S. to Europe, Borko notes that CEO pay in the travel industry is lower than in other sectors like tech or finance. Travel CEOs, on average, make around $7 million per year, with a significant portion tied to stock compensation. This discrepancy raises questions about income inequality within the travel industry and the disparity between CEO and worker pay.
Examining the case of American Airlines CEO Robert Isom, who received a $31 million pay package, Borko highlights the intricacies of CEO compensation in different sectors. Isom’s raise was a result of government-mandated caps on CEO pay during the COVID-19 pandemic, which led to a catch-up bonus for his compensation. The structure of CEO pay reveals the priorities of companies, whether focused on stock performance, operational metrics, or diversity goals.
The discussion also touches on the concept of golden parachutes, which incentivize CEOs to act in the best interest of shareholders, even if it may not align with their personal interests. Kopit and Borko ponder the necessity of billionaires in society and the role of tax policy in addressing income inequality. Ultimately, they encourage listeners to share their thoughts on these complex issues and how they intersect with the travel industry.
