Do as I Say, Not as I Do.

This story astounds me.

For the large part of his tenure at United Airlines, Glenn Tilton has presided over a company in Chapter 11 bankruptcy that has suffered unprecedented financial losses. This fact, in and of itself, would seem to preclude any payments of an incentive based bonus, but let's consider the circumstances of this bonus further. 

While under his stewardship, the company has gone to its employees twice and asked them to take significant pay and benefits cuts. In addition to this, it seems very likely that before they exit bankruptcy protection, all of the defined benefit pension plans will be terminated.

I realize that in the grand scheme of CEO compensation in the United States today, a $366,000 bonus is a pittance. It is also clear to me that this is a benefit that Tilton is entitled to. What astounds me is the arrogance that allows him to completely ignore the overwhelming symbolic importance of this bonus and how it undermines his ability to lead.

One of the primary responsibilities of a President/CEO of a company is to lead. A basic tenet of leadership is to set an example for others to follow.  What kind of example does it set when you ask your employees to make significant sacrifices, while at the same time taking a bonus that is probably 10x the average annual salary of your line employees?

If you were interested in crushing the morale of your employees and ruining any good faith you may have had in your negotiations with labor, this is probably the way to do it. I just have to wonder how an experienced leader can do something like this without considering the overall implications. It defies common sense.

As a general rule, I can't say that I find myself agreeing with large industrial unions, but I think this response from the mechanics' union at United is spot on.