April 23, 2024
Thakran, who has no private aviation experience, will also get 50 free King Air hours and up to a 100% bonus.
Wheels Up is giving its new Executive Chairman, Ravi Thakran, a consulting contract worth $665,000 per year, according to an 8-K filing made today.
The deal comes as Wheels Up has said it is clamping down on expenses.
It is promising to turn losses into an Adjusted EBITDA profit in 2024.
Earlier this year, it cut staff to save $30 million.
In a filing on March 1 announcing the job cuts, Wheels Up said, “The plan is intended to streamline the company’s organization and reduce headcount in areas of the business that do not directly impact the company’s operations or its customers’ experience. Excluded from these actions were key operationally focused employee groups such as pilots, maintenance, and operations-support personnel.”
Thakran replaced Founder, Chairman and CEO Kenny Dichter as Executive Chairman on May 9.
The move came ahead of the private flight provider announcing another loss in Q1 results.
In the most recent quarter, Wheels up recorded a net loss of $101 million on $352 million in revenues.
Adjusted EBITDA was flat year-over-year, with a loss of $49 million. Cash and Cash Equivalents fell from $586 million to $363 million.
Thakran will also get 50 hours of flight time on a King Air 350.
However, he must join Wheels Up as a Core member.
The value of the flights is around $250,000.
The new boss also gets a one-time equity award of 160,000 restricted stock units. They vest in equal annual installments over two years.
Thakran will also be eligible for a bonus of up to an additional $665,000.
It’s not apparent how often the Singapore-based executive will be at Wheels Up’s headquarters in New York since his job description includes working remotely.
However, when he is in the headquarters, he can expense “up to $800 per night for New York City hotel
accommodations.”
The deal is retroactive to May 9, when he moved into his new position.
Before moving into private equity, Thakran was Asia Pacific President of Sephora and then Chairman of parent LVMH Asia, with a background mainly in watches, jewelry, fashion, and cosmetics.
Thakran joined Wheels Up as Chairman of Aspirational Consumer Lifestyle, Corp., the private aviation company’s SPAC merger host.
The pay package for Thakran comes after Wheels Up received criticism for Dichter’s exit package, which included $950,000 per year for two years, a $3 million payout, and free flight hours.
Just last week, Wheels Up had to fend off again inferences it was preparing to file for bankruptcy.
After a 10-to-1 reverse stock split designed to avoid delisting by the New York Stock Exchange boosted its share price to $3.52, Wheels Up stock closed today at $1.01.
Wheels Up’s market cap at the end of the day was $25.4 million.
Thakran’s compensation represents 2.6% of Wheels Up’s current market cap.
Using Delta Air Line’s market cap as a comparison, its CEO Ed Bastian would receive base compensation of $740 million with the possibility of another $740 million in bonus pay.
Delta, Wheels Up’s largest shareholder, is valued at $29.6 billion.
In 2020, after Covid shuttered the travel business, Bastian suspended his $900,000 annual salary for at least six months.
Bastian had recently indicated support for Wheels Up’s turnaround plans.
Perhaps to blunt the news of the new compensation package, Wheels Up announced a July promotion cutting prices yesterday.
A spokesperson tells Private Jet Card Comparisons, “We don’t comment on specific compensation matters. The compensation committee and full board consider a wide range of data points when determining the appropriate compensation for our directors and senior executives. The entire team is laser-focused on continuing progress on our redesigned programs to better serve our members and customers in support of our path to profitability.”
