Freeland says feds will voice concerns to Air Canada over executive bonuses

News about this airline - please include a link to the source as well as the article text itself.
Web site: http://www.aircanada.com/
Post Reply
User avatar
bimjim
Forum Administrator
Forum Administrator
Posts: 34911
Joined: Fri May 12, 2006

Freeland says feds will voice concerns to Air Canada over executive bonuses

Unread post by bimjim »

https://www.bnnbloomberg.ca/freeland-sa ... -1.1611825

Freeland says feds will voice concerns to Air Canada over executive bonuses
Jordan Press, The Canadian Press
02 June, 2021

OTTAWA - Air Canada is heading for a bout of political turbulence as Finance Minister Chrystia Freeland signalled her displeasure over millions in bonuses to the airline's executives as the company negotiated a federal bailout.

The airline on Monday disclosed in its annual proxy circular to shareholders that it gave $10 million in bonuses to people the investor document called instrumental to the airline's survival over the past year as air travel plunged during the pandemic.

In a lengthy comment Wednesday, Freeland, calmly and slowly, said she was disappointed in how some businesses seem not to be behaving as responsible corporate citizens while receiving taxpayer-funded federal aid to survive the pandemic.

On the bonuses themselves, she called them inappropriate.

In April, the airline and government agreed to a $5.9 billion loan package that includes money to help refund passenger tickets, but also capped executive compensation at $1 million until 12 months after the loan is fully repaid.

The government also paid $500 million for a six per cent stake in the country's biggest airline, which Freeland says was done to ensure taxpayers could benefit once Air Canada's revenue rose once regular travel resumed.

It also makes the government one of the key shareholders in the airline.

“That gives us a voice in decisions taken by the company, and we will not shy away from using that voice to express our very reasonable view of what constitutes responsible corporate behaviour,” Freeland said.

“Canadian companies receiving money from the government have a duty to behave responsibly when it comes to regular Canadians who are now their shareholders as well as their customers.”

In the House of Commons later, Prime Minister Justin Trudeau said the airline's executives needed to provide an explanation as he was pressed by the Bloc Quebecois to make Air Canada claw back the compensation.

Freeland made the comments during a call with reporters where she outlined the details of a new federal program to help eligible companies rehire laid-off staff, or boosting hours for existing workers, by underwriting up to half of the payroll increase.

The government sees the program as an avenue to flow aid to recovering businesses as it winds down the wage subsidy, which has provided over $80 billion in aid to date. The official launch can't happen until Parliament approves the Liberals' budget bill, but the government is promising payments to be retroactive to June 6.

The value of the wage subsidy and suite of “recovery” benefits are set to decline starting next month. Freeland said the government will be looking at a suite of indicators before changing plans, including vaccination rates and case counts, how much of the economy has reopened, employment levels and hours worked.

The Air Canada investor document noted the airline benefited from $554 million through the wage-subsidy program in 2020, which the company said helped retain workers even as it laid off 20,000 staff because of the downturn.

The document said the airline plans to continue applying for the aid.

Freeland herself was scheduled to get on a plane later Wednesday to fly to the U.K. for a gathering of G7 finance ministers, which she noted was an in-person-only event.

As part of her travel plans, Freeland said she consulted the country's chief public health officer, got tested for COVID-19 earlier this week, and plans to take precautions while at the meetings and then finally staying in a government-quarantine hotel before isolating in her home.

She said travel should be undertaken with extreme care and only where absolutely necessary.

“I undertake this trip with great reluctance because I think it is important for all of us to stay as close to home as possible,” Freeland said. “But my judgment was that it was important for Canada to have a seat at this table were some important decisions that will have a real effect on the lives of Canadians.”

Among the decisions expected are consensus on a global corporate tax rate that the United States has pushed. Freeland said Canada backs the concept, but wants to hammer out what the rate should be and the rules about how taxes are levied, which vary by jurisdiction.

Similarly, Freeland said she's also looking for agreement on taxing digital services. Absent consensus, Freeland said the government would move ahead unilaterally with its own digital services tax starting Jan. 1, 2022.
User avatar
bimjim
Forum Administrator
Forum Administrator
Posts: 34911
Joined: Fri May 12, 2006

Re: Freeland says feds will voice concerns to Air Canada over executive bonuses

Unread post by bimjim »

https://queenscitizen.ca/2021/06/03/com ... e-bonuses/

Commons blames Air Canada for executive bonuses
Logan Leo
2021/06/03

The House of Commons explicitly requested a resolution submitted by Javier Barsalou-Duval, a Black Quebecois transport critic What [la] Chambre condemns senior management’s decision to award Air Canada a $ 20 million bonus after the company received nearly $ 6 billion in public assistance.

Black Quebecois also asked Prime Minister Justin Trudeau Demand a refund and freeze nearly $ 6 billion in aid to Air Canada by then, We can read on the block member’s Twitter account.

Keep in mind that of the $ 20 million in bonuses approved by Air Canada’s board of directors, half have already been granted. To qualified managers of the organization.

This week’s announcement of existence Motivation And special stock options (Stock options) Raised by Air Canada managers Opposition parties in Ottawa are angry, but so are many unions.

The information, released Monday in a report intended for the airline’s shareholders, did not take long for Air Canada’s Flight Attendants Union to deny. The union then recalled More than half of the 21,700 employees will be laid off in 2020Not to mention the $ 5 billion in financial losses, without a federal wage subsidy.

Black Quebecois leader Yves-Francois Blanchett on Tuesday asked Air Canada executives to repay the bonuses. Vile and obscene, Conservative Party leader Erin O’Toole said he was not It is appropriate to use taxpayer money for executive salaries in the private sector.

Liberal MP Pablo Rodriguez also called on the airline to consider it.

Carefully, the finance ministry returned the ball to the airline, it recalled The support provided to Air Canada by the HUGE loan clearly indicates the limits to executive compensation.

On Wednesday, Justin Trudeau called the situation not acceptable and said Canadians have a right to ask for solid explanations to the largest airline in the country.

The Prime Minister said he was particularly shocked to see this Air Canada is discussing its deals with us, giving a huge bonus to Air Canada executives.

However, Finance Minister Christian Freeland declined to comment on the matter 24 hours after the news arrives. She expressed her frustration with the media pressure, acknowledging Air Canada’s decision Inappropriate.

I say as one of the major shareholders of the company following the government bailout, She mentioned. However, the minister did not want to demand Freeland reimbursement.

In April, Ottawa has provided over $5 billion in repayable loans At Air Canada. This rescue plan includes restrictions on executive compensation In the future. In fact, the limit on dividends and share buybacks comes into effect at the end of the contract and lasts up to 12 months after the loan is repaid.

Air Canada received $6,656 million in 2020 from the federal government’s emergency wage subsidy program, any company has publicly disclosed.
User avatar
bimjim
Forum Administrator
Forum Administrator
Posts: 34911
Joined: Fri May 12, 2006

Re: Freeland says feds will voice concerns to Air Canada over executive bonuses

Unread post by bimjim »

https://simpleflying.com/air-canada-ceo-bonus-returned/

Air Canada’s CEO Returns 2020 Bonus After Public Outcry
Emily Derrick
June 7, 2021

After several days of intense public backlash, top Air Canada executives have returned bonuses they received in 2020. The airline released a statement saying the decision to return the money was voluntary. Approximately 900 Air Canada employees have kept their end-of-year bonuses and stock options.

Senior Air Canada executives have returned their 2020 bonuses due to major public outcry. Photo: Air Canada
Air Canada has been at the center of controversy surrounding its 2020 bonus program. 2020 was an unprecedentedly challenging year, with many airlines having to make cuts and lay off staff, including Air Canada. However, on May 31st, Air Canada announced it would give CA$10 million ($8.29 million) in bonuses and stock options.

The airline revealed that around half of this had been paid out to employees at the end of 2020. However, the public was quick to point out that while some employees were receiving a bonus, others within the company were losing their jobs. After days of public outcry and the Canadian Government condemning the action, key figures in the airline are handing back the money.

Who gets to keep the money, and who doesn’t?

In a statement, Air Canada confirmed that the current executive vice presidents, and president and CEO Michael Rousseau, would all return their bonuses. In addition, former CEO Calin Rovinescu, who retired in February 2021, will also return his portion of the bonus program. Mr Rovinescu is donating his 2020 bonus to the Air Canada Foundation.

According to the airline’s statement, around CA$8 million ($6.6 million) of the total bonus program was given to around 900 middle management employees who will keep their bonuses and shares. In addition, lists on the company website suggest that four executive vice presidents will keep their bonuses while six will return the bonus money and the shares.

Justification for Air Canada

In the statement announcing the return of the bonus money, Air Canada attempted to provide some justification for the bonus program. Although it received a government loan, the airline confirmed that none of this money was used to fund the bonus program. Instead, the airline raised CA$8 billion ($6.7 billion) during the pandemic to help keep finances afloat.

Furthermore, Air Canada highlighted that several senior employees, including Mr Rovinescu and Mr Rousseau, took salary cuts last year. Both men waived their entire salaries during April, May, and June of 2020 to help with cash flow. In addition, several other management employees took salary cuts reducing salary cash flow by CA$11.5 million ($9.5 million), more than the total bonus amount.

Confusion and misinformation

By giving out stock options, Air Canada intended to allow executives to recover some of the salaries they lost during 2020. As stock options appreciate in value, executives wouldn’t be out of pocket in the long run. If the stock value falls because the airline struggles, executives would not get additional financial benefits.

In a separate statement, Mr Rovinescu said there was “considerable confusion” and “misinformation” regarding the bonus program.

However, many still regard the bonus program as a bad move by the airline. In April, the airline was negotiating a CA$5.9 billion ($4.8 billion) rescue plan with the Canadian government. Last year the airline also benefitted from the Canada Emergency Wage Subsidy program to the tune of CA$656 million ($542 million). In addition, the airlines’ revenues fell by around 70% and it laid off over half its workforce. This has left many feeling the bonus program was out of touch and insensitive.
User avatar
bimjim
Forum Administrator
Forum Administrator
Posts: 34911
Joined: Fri May 12, 2006

[Opinion] Air Canada bonuses business as usual for the executive suite

Unread post by bimjim »

https://www.theglobeandmail.com/busines ... ive-suite/

[Opinion] Air Canada bonuses business as usual for the executive suite
David Milstead
JUNE 7, 2021

In the past week, Air Canada’s management bonuses got called scandalous, outrageous and worse – so much so that airline threw up its hands and, with a non-apology, said its top executives would give theirs back. The thinking behind the bonuses, however, remains just business as usual in corporate Canada, where companies always find a way for the people at the top to get paid.

Indeed, angered Canadians might find it incredible, but the folks in the Air Canada boardroom were likely caught off guard by the reaction last week. To their eyes, they’d produced a scaled-back, judicious and conservative payout program.

The company started 2020 with a bonus pool of $45-million for 3,600 executives and managers, which was based in part on how much profit Air Canada racked up. Then COVID-19 hit, the airline was grounded and all those targets were pretty clearly not going to be met. Or, as Michael Wilson, chairman of Air Canada’s human resources and compensation committee, explains in his letter to shareholders, they were “no longer applicable nor pertinent.”

Air Canada could have decided to let the bonus program play out and pay out nothing. Instead, it decided to set new objectives pegged to “weathering the crisis” and positioning it for a postpandemic turnaround. These included keeping the airline’s financing in place, reducing expenses, and focusing on customer service and safety.

In this framework, 20,000 layoffs are good, because they cut costs. Refusing to refund cancelled tickets seems to harm the customer service goal, but it also saves money.

After 2020 wrapped, and Air Canada was asking for federal government help to avoid insolvency, the board looked back at the year and approved $20-million in bonuses. Mr. Wilson noted that is “less than 50 per cent” of the previous bonus target.

Then, for reasons not well explained, Air Canada awarded “only” $10-million of it to about 900 employees. The five best-paid execs got a total of $1.84-million – which, together, is less than many CEOs got in bonuses all to themselves.

Why did Air Canada receive outsized anger, including opprobrium from all stripes of politicians? For one, we love to hate airlines in normal times. And Air Canada seems to risk becoming a ward of the state every decade or so, even if the effects of COVID-19 were very different from the typical airline-industry bungling.

The most important, and legitimate, reason is that no other company received such outsized government support – a $5.9-billion rescue package from the feds, on top of $656-million from the federal government’s Canada Emergency Wage Subsidy program.

There’s no doubt there was a lot of work to do to keep Air Canada alive when its planes couldn’t fly. But stiffed customers and beleaguered taxpayers find the very concept of a management performance “bonus” antithetical to coming to the government hat in hand.

Sunday night’s announcement from Air Canada strongly suggested that it still thinks you, and not they, are wrong: “Every step of the way, management and the Board have acted in the best interests of Air Canada and its stakeholders,” the airline said.

It was because of “public disappointment” that a handful of executives would give back their bonuses, as well as a block of stock-appreciation awards that were explicitly designed to recoup lost 2020 salaries. (Air Canada said publicly last year these executives would “forgo” salary. This is not the definition of “forgo.”)

Former CEO Calin Rovinescu, who said Sunday night he would donate his bonus and stock-appreciation proceeds to the Air Canada Foundation and receive no tax benefit, sounded an even less contrite note by blasting “considerable confusion, misinformation and public disappointment” over the compensation. The changes will reduce Mr. Rovinescu’s 2020 compensation from $9.26-million to $8.37-million, based on previous disclosures.

Air Canada says roughly $8-million of the $10-million in bonuses that were given to executives and managers below the half-dozen at the very top will not be returned to the company. It also seems to have left in place modifications to its long-term incentive plan, in which the airline decided to drop 2020′s results from the formula because it realized there would be zero payouts for several years if it factored in the COVID-19 loss. That could bring hundreds of thousands of dollars to the plan participants in future years.

All this is what passes for restraint in executive compensation. Based on my read of proxy circulars this spring, rare is the Canadian company that left its bonus plan intact in 2020 and chose to pay out zeros when profits tumbled. Moving the goalposts in the middle of the pandemic was a common decision last year, made by boards full of ex-CEOs and clubby corporate directors.

In its Sunday night statement about the bonus giveback, Air Canada said its 2020 pay decisions “were consistent with compensation outcomes at companies that also suffered significantly during the pandemic.” Unfortunately for the workers of Canada who have truly suffered in this pandemic, that assertion from Air Canada is spot on.
User avatar
bimjim
Forum Administrator
Forum Administrator
Posts: 34911
Joined: Fri May 12, 2006

Re: Freeland says feds will voice concerns to Air Canada over executive bonuses

Unread post by bimjim »

Don't you feel for them??

Poor things, imagine having to take a reduced bonus while your brand new 2021 Maserati sits in the showroom while some other multi-millionaire -bleep- walks towards it.

And while MOST of the rest of us are scrunting to put food on the table.
Post Reply

Return to “Air Canada - Tango - Rouge”