Southwest Airlines Co. (NYSE: LUV) announced yesterday it will share $586 million through its ProfitSharing Plan with its Employees for 2016—equaling approximately 13.2 percent of each eligible Employee’s eligible compensation, or the equivalent of six weeks’ pay.
This is Southwest Airlines’ 43rd consecutive ProfitSharing award. For the 2016 plan year, Southwest announced a new funding structure that will pay part of the ProfitSharing award to the retirement plan and part in cash. Most employees will receive 10 percent of eligible compensation as a contribution to the ProfitSharing Plan and the remainder—approximately 3.2 percent—in cash, both of which will be paid on April 20, 2017. Some employees will receive the entire ProfitSharing award in the retirement plan as specified in their collective bargaining agreement.
“Our People-first approach, which has guided our Company since it was founded, means when our Company does well, our People do really, really well,” said Gary Kelly, Chairman and CEO of Southwest Airlines. “Our People work incredibly hard and deserve to share in Southwest’s success.”
This $586 million award is equivalent to more than $1.6 million a day and will be funded on April 20, 2017. When this ProfitSharing award is added to the Company’s $351 million in Company contributions to Southwest’s 401(k) plans for 2016, Southwest will have rewarded Employees with approximately $937 million, $852 million of retirement benefits PLUS a cash payment of $85 million.
Southwest Airlines also invested approximately $746 million in its Employees’ other benefits during 2016, including healthcare coverage, and other welfare and wellness programs. In total, that’s nearly $1.7 billion dedicated to the wealth and wellbeing of Southwest Employees for 2016 alone, on top of base salaries.
Southwest was the first in the industry to offer a ProfitSharing Plan. Through the ProfitSharing Plan, Southwest Employees currently own more than four percent of the Company’s outstanding shares.