XNA approves $29 million budget, Russell Reynolds to find next CEO

Northwest Arkansas Regional Airport Authority approved spending up to $200,000 to hire an executive consultant to review the airport’s organizational structure and recruit a CEO. The board also approved a 2018 budget that reflects a 22% rate cut for carriers.

On Wednesday (Dec. 13), the board hired consultant Russell Reynolds Associates for the executive services after receiving proposals from multiple consultants. The consultant’s work will include review of the structure, then the CEO search. The structural review would comprise of $75,000 of the contract, with the remaining $125,000 for the search.

Members of the board’s executive committee said the contract was reasonable and not out of line with expectations.

The board has started working to replace CEO Scott Van Laningham after he announced he would retire. Previously, the board had looked at assessing existing executive staff but shifted the process to review the airport’s organizational structure.

The airport would pay the consultant in three segments — at the start of the CEO search and after 30 and 60 days. The consultant’s retainer fee would be equal to one-third of the new CEO’s salary, and one-third of a $375,000 is $125,000. However, the salary has yet to be determined.

Also, a completion date has yet to be set for the structural review and CEO search, but Van Laningham would like it to be completed in six months, setting him up for a fall 2018 retirement. Jamie Hechinger of Russell Reynolds previously said “a good CEO search done right” takes between four and six months.

As part of the airport’s 2018 budget, it looks to hire a chief operating officer and a planning and construction director. XNA has a pool of candidates for the latter position, and the previous position is expected to be hired in mid-2018.

2018 BUDGET
The board approved a $29.188 million budget for 2018 that included 4% merit-based pay increases for employees. Managers will decide how the raises are handed out based on an employee’s performance, and some employees might receive less or more than the 4%. The $536,851 deficit in the budget is a result of adding a $596,700 project to expand the economy parking lot.

The board also approved a rate decrease for carriers, and based on enplanements, the rates will decrease 22% to $5.91 per enplanement as a result of nearly $550,000 decrease in interest on debt owed. Another factor leading to the decrease was the lack of capital projects in the past year as the rates are also based on the project costs. After the meeting, Airport Director Kelly Johnson explained that a decrease in rates doesn’t mean airline ticket prices will decline. Ticket prices are set by the carriers, and she doesn’t expect ticket prices will fall as a result of the rate decrease.

The rates will likely increase after capital projects are completed next year. However, the new parking deck won’t impact the carrier rates as they don’t use it. In mid-January, Nabholz began construction on a $35 million parking deck, which will increase the number of parking spaces at the airport by 34% to 4,631. The project is expected to be completed in August.

Project executive Jeff Gattis of Nabholz said all structural concrete work for the four-story parking deck will be completed by the end of the year. Crews are also working to widen airport roads for the project.

“Everything is going well,” Gattis said.

After an executive session, the board agreed to increase Van Laningham’s salary by 7.5% to $200,524. By comparison, the salary for Ronald Mathieu, executive director for Clinton National Airport in Little Rock, is $222,400. Mathieu’s 2018 salary has yet to be determined. Van Laningham’s salary increase goes into effect Jan. 1.