Asiana was struggling financially, and is being sold in a rescue to HDC Hyundai Development Company. That deal is expected to close in April. In the meantime, with coronovirus sapping travel demand, the Star Alliance member airline has cut 79% of China flying and 25% of intra-Southeast Asia departures.
While coronavirus is in some sense an exogenous event, beyond the control of management, the company’s weakness made them even more vulnerable. As a result the entire top management team at Asiana has asked to resign in recognition of their failure. While the company has determined that’s not in the best interests of the business at this time, top managers will all take a significant pay cut.
[Asiana’s CEO] said that all executives, including himself, have requested to resign to share the burden of the company’s difficult business situation…the voluntary resignations are not to be accepted right away, as the company needs them to operate.
“Their resignation illustrates how firm the company is devoted to execute all-out effort to save cost,” an official told The Korea Herald.
Han said that he himself would return 40 percent of his annual salary, while other executives will return 30 percent and division leaders will return 20 percent of their annual pay.
And with all executives putting themselves on the line, and taking reduced pay, the airline’s unions are willing to share in the pain too. Its pilots, for instance, agreed “to take 15 days of leave and return 50 percent of their bonus pay.”
As Japan Airlines struggled in 2006, its then-CEO cut his own perks and then in 2007 cut his salary down to $90,000. He said that unhappy customers shouldn’t blame the employees they’re dealing with, they should blame the person in charge.
Good executives own their failures, just as they’re rewarded for their successes. Good companies arrange their institutions and incentives so that this is the case – rather than packing their boards with cronies who reward failure as much as success. Boeing’s CEO, by the way, was reportedly surprised when he was fired last year.
Maybe Parker should read into this but then is he “honorable ” ?
Unfortunately, it is a cultural thing. In the US, execs don’t resign, they are rewarded with huge bonuses by their boards. Would that it were otherwise. Cheers — Kathryn
Flying business with both, I found Asiana a much better airline than SQ, hands down!
Does this ever happen with US airlines though?
In Japan 30 years ago the CEO would commit ritualistic suicide.
@Jojo – Maybe somebody could drop a hint to Parker. Employees, stock holders, and customers would all rejoice. How sad is that?
In the US they get golden parachutes and the mechanics get coerced into taking a pay cut, and then management walks away from the table, maligns them and takes them to court nearly a decade later when their salaries are still below what they were before the givebacks.
difference between american and asian corporate culture in a nutshell. My company’s stock has been trash the last 5 years while the DOW has basically doubled. Don’t see my CEO offering any sacrifices.
Parker and pals would never do this but they should!
Kinda sad that between the corona virus and that crash in SFO, Asiana would not be in such bad straights. Will there even be an Asiana after the sale?
In America, we reward bad behavior. Really has become the “trend” during the last 20 years.
For what it’s worth, I forgive them all. Selfish request: please bring back first class!
@Kathryn, “Unfortunately, it is a cultural thing. In the US, execs don’t resign, they are rewarded with huge bonuses by their boards. Would that it were otherwise. Cheers — Kathryn”
Recent CEO Resignations
On November 3, 2019, McDonald’s Corporation announced that CEO Steve Easterbrook would step down as a result of his consensual relationship with an employee that violated company policy.
On September 25, 2019, Juul CEO Kevin Burns resigned. Burns’ simply took too long to acknowledge the potential health risks of the company’s vaping products. On September 9, the FDA banned marketing to young users and various flavored-vaping products. Some states have already followed suit.
On September 24, 2019, WeWork parent, We Company, stated that its controversial founder, Adam Neumann, would step down as CEO amid reports of his predilection for marijuana and over-the-top grandiosity. Investors and others had already raised concerns about the company’s governance and business model.
On March 28, 2019, Wells Fargo CEO Tim Sloan resigned due to the widespread sales practices scandal based on opening millions of unauthorized consumer accounts.
On January 8, 2019, Herbalife’s chief executive Richard Goudis resigned over unspecified comments he made prior to taking the helm contrary to the company’s expense-related policies and business practices. According to the news release, his departure was not due to any issues regarding the company’s financial reporting.
On September 10, 2018, Les Moonves, Chairman, President and CEO of US media giant CBS resigned following allegations of sexual misconduct.
On July 17, 2018, Texas Instruments Chief Executive Brian Crutcher resigned due to violations of the company’s code of conduct, less than two months after taking the control of the company. The semiconductor company stated that “the violations are related to personal behavior that is not consistent with our ethics and core values.”
On June 15, 2018, Theranos CEO Elizabeth Holmes resigned after Holmes and Theranos were charged with fraudulently raising in excess of $700 million from investors. Holmes made numerous misleading statements about the firm’s portable blood analyzer,
On June 1, 2018, Samsonite CEO Ramesh Tainwala resigned after allegations that he padded his resume by falsifying his academic credentials.
On January 27, 2018, Steve Wynn, CEO of Wynn Resorts Ltd. and Finance Chair of the Republican National Committee resigned after dozens of accusations of rape and sexual harassment.