Alaska's Ayer: Moral CEO Departs While on Top
SEATTLE (
) -- A year ago, Bill Ayer thought he wanted to retire as CEO of
Alaska
(ALK) - Get Report
but wanted to be sure he could handle the dramatic downshifting required to leave the perpetually busy job of running an airline.
So "he took a month off to see if he could do it," said Phyllis Campbell, the airline's lead independent director and chairman of Pacific Northwest Markets for JPMorgan Chase, in an interview. "He was testing himself and the company a bit. He kind of checked out -- he took a scuba diving trip.
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"It taught him that the company did fine when he was gone, and that he could do other things and enjoy them," Campbell said. She noted that Ayer was not totally out of touch, and did maintain some contact. But after saying for two years that he wanted to step down as CEO, he was more certain after a month away.
"It's always tough when a CEO steps back from being at the heart of things and retires," she said. "But he was confident this would work."
Ayer, 57, has spent 30 years at Alaska. During the last decade, after being named CEO in 2002, he oversaw a turnaround during which Alaska not only rose to become the nation's seventh largest carrier, but also, by some measures, became its most successful. In 2003, Alaska unveiled a restructuring plan, which included cost-cutting, fleet replacement and financial goal-setting. In 2011, the carrier achieved a long sought goal and generated a 10% return on reducing costs.
"The future has never been brighter than at this moment," Ayer said in a February 2011 interview. It turns out that he was, at that time, already charting his departure.
Wall Street clearly noticed Ayers' efforts. In 2011, Alaska shares rose 30%, while shares in nearly every other major airline recorded double-digit losses. Also, as the industry consolidated, eliminating various carriers, Alaska was able to climb in terms of ranking its size and visibility. Through a focus on developing the Seattle hub and a strong West Coast network, Alaska became an eminently desirable partner for global carriers as well as a frequent subject of merger speculation, which it has consistently discouraged.
This year, facing high expectations, Alaska was the only carrier to miss first quarter estimates. To date, its share price has been flat, while most airline shares have shown gains.
Still, now Ayer is doing something that only the wisest CEOS are able to do: He is leaving on top. In this, he follows the path of another Seattle business leader, Jerry Grinstein, who retired from
Delta
(DAL) - Get Report
in 2007 after presiding over a turnaround that took Delta from a perpetual third among the big three airlines to one of the world's leading global carriers. Grinstein now works for a Seattle venture capital firm.
Of retirement, the extroverted, quotable Grinstein famously said that there was "lots of wine to drink and lots of art to see," while Ayer is a quieter, more restrained sort whose only interview regarding his retirement was for an internal airline publication.
But Ayer does share another trait with Grinstein: He is one of those rare CEOs who has turned down money and stock from his employer. Grinstein took one of the airline industry's lowest CEO salaries and in his final year asked that additional compensation, which he could have expected, be donated to funds to benefit Delta employees and their children. Similarly, Ayer "turned down a bonus one year, and he has (repeatedly) talked the compensation committee into reducing his stock grants," Campbell said. "He said 'I am well compensated. I don't believe in ratcheting my pay up.'" Ayer currently holds 29,180 shares of Alaska stock, valued at about $2.2 million.
"I have been on several boards -- I have never seen this (as a board member)," said Campbell, a friend of Grinstein's, who added: "I put Bill and Jerry in the same class."
As for Ayer's future, Campbell said she expects he will be involved in civic affairs. He was recently named a regent of the University of Washington, where he is also a part-time professor in the business school. "I've watched him in the classroom," Campbell said. "He loves coaching and mentoring and seeing people grow."
Ayer is also a pilot who flies with a non-profit group that transports ill patients to hospitals, something he has been able to do only on weekends. Also, he will remain as Alaska chairman, at the board's request, and will likely become more involved in an airline industry group working with the Federal Aviation Administration to upgrade the nation's air traffic control system. "Bill has a real civic heart," Campbell said. "I think he will find a few hours to do things he has not had time to do."
-- Written by Ted Reed in Charlotte, N.C.
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