Originally Posted by
YYZC2
I don't know if it's simple cynicism or some kind of cognitive dissonance or what but anyone who can't draw a line between this incident and the much-maligned "AC customer service culture" isn't trying hard enough or is being disingenuous.
As someone who flies a lot of different airlines, I would tell you that AC's customer service is, overall, decent. As an investor, I would remind you that the board and management's job is to generate returns for the shareholders, and that having the best customer service is not always a profitable decision (you can, in fact, put a price on goodwill; it just may not be as high as some would like). As a customer, I don't really care how management is compensated; I care about the product I get (including the service) and the price I pay.
Call it cognitive dissonance if you want, but there's nothing wrong with seeing something from multiple perspectives. For instance, I've pointed out a number of times in the refund thread that the customer in me was mad at AC about the lack of refunds, but the corporate finance expert in me understood why they were doing it. Obviously those two positions are in opposition.
But I see no conflict between being annoyed at AC for customer service fails and not being bothered by this bonus program.
Originally Posted by
tracon
With all due respect. A finance guy justifying a bonus is like wait staff justifiying a tip.
Quite frankly there's no good reason for either.
Here's your wage, do your job.
If you do a poor job the boss should retrain or turf you.
If the employee works extra hard, here's a raise.
If the employee works extra hours, here's overtime.
If the employoee isn't happy, quit.
You're entitled to your opinion, but that's not how the vast majority of businesses work, especially companies that are large and/or publicly traded. If AC wanted to adopt that approach, it would undoubtedly have to significantly increase salaries for many positions, because if you can make $50K base + potential for 20% bonus somewhere else, why would you work at AC for $50K base and nothing else? Or make all head office/management type workers eligible for overtime, which most usually aren't, to the point where the expected overtime pay makes up for the lost bonus.
A lot of the AC employees eligible for this program likely worked both extra hard and extra hours last year. So would it make you feel better if AC had called the $10MM "raises" and/or "overtime"?
There has been some research that incentive-based pay isn't as effective as shareholders would like it to be, and I would agree with you that executive compensation as a whole is is too high (especially for CEOs). But that's a very macro issue, well beyond whether AC should or shouldn't have paid these $10MM of bonuses.