Fiordland

I have a different perspective. I can understand "retaining talent" being critical in very small organizations where you just can't cross train people and do proper resource planning. I could even buy this argument if we are talking about "celebrity chefs" or athlete. We are not we are talking about middle management and potentially senior management in a massive corporation. The idea that the world will come crashing in on Air Canada if these people walk is silly. That is especially the case when they have to implement massive layoffs.

In normal time when WestJet and whoever is hiring head hunters to go chase after AC employees perhaps an argument could be made. That is not the case in an industry wide melt-down.

This is more acceptable in the case of WS where the airlines compensation polices only have to be accountable to the board representing the shareholder. In the case of AC where the shareholder now include the tax payer it is a different story. We will have to see how this pans out. The tax payer can be annoyed but have its hands tied for things in the past. Going forward AC is now on notice this will not permitted in the future.

On Time Reports

A rare weekend news release


Air Canada Clarifies and Updates 2020 Compensation Programs
https://aircanada.mediaroom.com/2021...ation-Programs

Bohemian1

Now there's an interesting turn of events. I guess the PR hacks prevailed in the end.

Symmetre

The very fact that Air Canada's PR department felt compelled to issue this at all confirms what I said at the start - the optics are simply brutal.

Sopwith

I stand corrected and quite surprised.

Fiordland

Absolutely. AC (until it repays is loans) will be held to the same standards as crown corporations from an executive compensation perspective. That is a good thing it provides the senior executives an incentive to rebuilt quickly so it can return the tax payer money as quickly as possible and return back to only being accountable to shareholder who are more interested in dividends than executive compensation.

I am not certain if it was AC being tone deaf or their PR organization looked at the first couple of pages of the annual meeting package and concluded the media is not going to look at this stuff it is fine and did not flag it. Either way it did not go over well.

tracon

Honourable enough to not take a tax receipt.

https://mma.prnewswire.com/media/152...n_Pr.pdf?p=pdf

...Mr. Rovinescu has decided to donate..... and has requested that no charitable tax deduction receipt be issued to him in connection with this gift.

Symmetre

I guess optics do matter. Further, from today's Financial Post:

Air Canada executives to return bonuses after government aid outcry

After getting access to $5.9 billion in government help, the airline gave out $10 million in bonuses

TORONTO — Top executives at Air Canada will return their bonuses and share awards, the carrier said on Sunday, in response to “public disappointment” over executive compensation at the airline, which received government aid in April.

Air Canada said chief executive, executive vice presidents and its former chief executive, who retired in February, would return the bonuses and share appreciation units “in order to help address this unintended consequence.”

Full story: https://financialpost.com/transportation/airlines/air-canada-executives-to-return-bonuses-after-government-aid-outcry

24left

In a CBC article posted a short while ago

After outcry, Air Canada says its top executives giving back bonuses
Majority of the $10 million bonus program, held by middle managers, not returned

The Canadian Press · Posted: Jun 07, 2021 9:01 AM ET


QUOTE:

"The statement does not include middle managers, whose bonuses made up more than $8 million of the $10 million bonus program, among those who are volunteering their bonuses."


https://www.cbc.ca/news/business/air...rned-1.6055825

yulred

Not really. Regardless of the PR exercise thats followed, the precedent has been set: AC sees nothing wrong with handing out bonuses even in these conditions.

“Honourable” people don’t publicize self-promotional things like this. He’s sitting on a lot of boards - I don’t think this was lost on them, and I doubt they weren’t part of this “solution”.

Transpacificflyer

Et voila. After the debacle of the GM & Chrysler loan write offs I knew that the feds were not going to get burned again. We are not privy to the loan and support agreement, but I think it is a good bet that there was an undertaking/condition of full disclosure. The speed in which this was resolved speaks to this. The Minister of Finance is not an idiot and she captained the revised North American trade agreement against some very difficult and aggressive US negotiators. She knows where to find hidden political bombs. On that basis, I expected that she was not going to accept technicalities as a means to give 5 wealthy Air Canada executives $1.9 million in payouts. One might be able to justify small payouts to lower position employees, especially if they had suffered loss of income or increased workloads. However, there was no reasonable basis to support giving 5 people a windfall payout.
I remain convinced that the bonuses were not fully declared, particularly the 5 large bonuses. AC C Suite got caught with its hand in the cookie jar.

tcook052

Not fully declared? How so as the article on the topic I posted here clearly states the bonuses "were outlined in the airline’s annual proxy circular to shareholders".

Sopwith

A cynic might speculate that this deal is a bit like trading baseball players, in which part of the deal is "future considerations".

RCyyz

Bravo to AC execs for giving the bonuses back. No matter your income, it must be tough to see your bank balance go up then have to write a cheque for the whole amount.

Boo to AC for declaring these bonuses in the first place.

Adam Smith

The facts are very much at odds with this theory.

• Neither Trudeau nor Freeland ever claimed not to have been aware of the bonuses before the circular was released and the media noticed it; to think otherwise is naive, because if they hadn't been aware, you can be bloody sure they would have told us so
• Neither mentioned that they would use provisions of the agreement to claw back the offensive payments

What is implied by the way this was handled is that AC on its own, or under vague threats from the government about making life difficult for AC on other matters in the future, decided to ask the executives to repay the bonuses to calm the PR situation, and that they agreed. Possibly with a nod and a wink that it would be made up to them at some point, as @Sopwith suggested.

A bonus that's a normal part of a compensation package, and that's down significantly from the previous year's, is hardly a "windfall payout". You can disagree with the optics of giving out bonuses, but it's misleading to call it a "windfall".

The greater "windfall" for AC execs is likely the exclusion of 2020 from all of the LTIP calculations, which will likely result in far more cash in AC execs' pockets than the bonus program did. But of course that's far more complicated than a bonus payment, so no one bothers to look at it.

I would also point out that AC has far more than 5 wealthy executives, all of whom have kept whatever payouts they received under this program. It's disingenuous of AC to refer to everyone other than the 5 NEOs as "middle management", because some of them are very senior and probably received six-figure payouts from this same program. Which again suggests that this is a PR-driven move rather than one imposed by the government through legal means.

Logistically, other than Calin, it's likely no one is writing cheques. They'll simply have the amount deducted from their pay over the rest of this year. And Rousseau's portion of the bonus wasn't even paid in cash in the first place, so he'll just forfeit the DSUs he had received. So for those hoping that the AC execs would feel some moment of pain when filling out a cheque (or doing a wire transfer or whatever), you'll be disappointed.