Minicucci to Takeover as CEO at Alaska Air Group
November 11, 2020

Earlier this week, Alaska Air Group (ALK) announced CEO Bradley Tilden (B- as CEO) will step down effective March 31st, 2021.

Tilden’s 8 year run could be categorized as a successful, but not outstanding endeavor. Alaska Air Group stock initially soared under Tilden, achieving an absolute return of over 600% in his first 5 years. However, shares have struggled since their 2017 peak having endured a not so-stellar Virgin America merger, shrinking margins, and eventually COVID-19 causing serious problems.

All that being said Tilden has produced an annualized TSR of 11% – solid for the volatile world of airlines. Over his 8 years, Tilden’s compensation never raised significant concern according to pay-for-performance measures such as a relative pay / TSR ratio. Over the last 3 years, his total compensation averaged out to $5.2mm annually.

Alaska Air Group performance under Tilden

New CEO Minicucci

Tilden will be replaced in-house by Benito Minicucci, currently president of of Alaska Air Group. Minicucci has worked at ALK for over 16 years, holding a variety of leadership positions such as COO and EVP. Starting in 2018, he had a 3 quarter tenure at Pacific Gas and Electric Co. where the company had a rough go, annualized TSR of -61%.

Patricia Bedient, Alaska Air Group lead independent director, had this to say: “This announcement is the culmination of a multi-year succession planning process … The board has complete confidence in Ben’s ability to lead Alaska to great success in the years to come”.  

Tilden will continue to advise ALK in retirement as chairman of the board; his track record is worse as a director, with a -23% annualized TSR during his current run on Nordstrom’s board. Minicucci has been a fellow director since May 2020, and will continue to serve while CEO.

Alaska Air Group Board of Directors (overall rating: C) 

Take Away

With an overall C rating, some may be skeptical of Alaska Air Group’s board selecting an internal hire. However, given his deep knowledge of the company and industry, and the fact that the board knows him well, it could prove to be a wise choice. It’s also positive that it appears well planned, an extended transition that goes to March 2021, and keeping Tilden on as Chairman could be the right recipe.

Shareholders will undoubtedly keep a very close watch on the start of MInicucci’s tenure and if performance doesn’t align to their hopes, there will certainly be pressure to make a change and that could reach beyond CEO into the boardroom. For now though, with airlines, and other cyclical and travel stocks starting to rebound on vaccine hopes, the future could be looking good.

Note: Letter grades represent proprietary Boardroom Alpha ratings that assess the individual’s track record as a director or officer across their career.   

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