As reported by Quartz, Spirit Airlines, which entered bankruptcy proceedings in November, has begun to unveil details regarding its ongoing reorganization efforts. In a recent financial update filed with the Securities and Exchange Commission, the airline disclosed a stark reality: its equity is currently valued at less than the compensation awarded to its executives in 2023.
Typically, shareholders see the total value of their investments diminish as they await repayment from a bankrupt company’s debtors, making it unsurprising that Spirit's present equity stands at a meager $12.6 million. This is in sharp contrast to the company’s last quarterly earnings report before filing for bankruptcy, where its equity was reported at $504 million.
The significant decline in value highlights the precarious situation for Spirit Airlines, particularly as the company’s stock was delisted from the New York Stock Exchange shortly after the bankruptcy announcement. Currently, it trades as a penny stock on the pink sheets. Notably, Spirit's equity is now less than the $18.3 million allocated for executive compensation as disclosed in its latest annual proxy statement.
The breakdown of executive compensation is as follows:
- CEO Ted Christie received $6.6 million in salary and bonuses.
- Then-CFO Scott Haralson received $3.6 million.
- COO John Bendoraitis earned $3.1 million.
- CCO Matthew Klein was compensated with $2.9 million.
- CIO Rocky Wiggins received $2.1 million.
Moreover, this comparison of equity to executive pay does not include the additional $5.4 million in retention bonuses that were approved shortly before the bankruptcy filing. This bonus pool includes $3.8 million earmarked for Christie and $175,000 for new CFO Frederick Cromer, contingent upon their continued employment and good standing with the company for at least one year.
The financial report, which is expected to be the first in a series of monthly updates, also provides insights into the airline's financial performance post-filing. Between the Chapter 11 filing on November 18th and the end of the month, Spirit Airlines generated $351 million in revenue but faced a staggering loss of $316 million, primarily driven by $290 million in expenses categorized as “other expenses.”
Comments