Facing public outrage, airline President and Executive Vice Presidents return bonuses awarded before airline agreed to pay restrictions in return for government loans
Bowing to public and political pressure, Air Canada announced late Sunday top executives would return bonuses and shares awarded even as the airline negotiated billions in public aid.
“Unfortunately, there is now public disappointment around the actions relating to these 2020 executive compensation outcomes,” the airline said in a statement. That disappointment included a unanimous vote in the House of Commons this week denouncing the spending.
The airline lost billions as a result of the pandemic. Faced with a slow recovery, the airline agreed in April to a $5.8 billion aid package with the government. It included loans and taxpayers taking a five percent equity stake in the airline. As part of the aid, Air Canada agreed to limits on executive pay. Only weeks later it it reveal the 2020 bonuses in a management circular.
The airline revealed that it paid $10 million in bonuses and shares to 900 employees, 80% to middle managers. It argued senior executives and 3,200 managers agreed to $11.5 million in pay cuts to help the airline survive. The bonuses were in line with compensation paid at other companies who suffered badly during the pandemic.
“These compensation outcomes were approved by the Board of Directors in mid-2020 in consultation with external advisors, and in conformity with the Corporation’s governance principles and best practices,” the airline wrote.
Common sense prevailed
Bloc Québécois Transportation critic Xavier Barsalou-Duval led the political charge against the bonus scheme. It was he who proposed the Commons motion condemning Air Canada.
“Common sense prevailed,” he wrote on Twitter. “It’s still too bad we had to force the issue. Without widespread indignation, everything leads to believe Air Canada executives would have socked away taxpayer money with impunity.”
Le bon sens a donc fini par triompher. C’est quand même dommage qu’il ait été nécessaire de forcer les choses.— XavierBarsalouDuval (@XBarsalouDuval) June 7, 2021
Sans l’indignation générale, tout porte à croire que les hauts dirigeants d’@AirCanada auraient impunément encaissé l’argent des contribuables.https://t.co/3eXtSdk206
“In order to help address this unintended consequence, the current Executive Vice-Presidents and the President and CEO of Air Canada have chosen to voluntarily return their 2020 bonuses and share appreciation units,” the airline said.
2020 all about preserving the company
Retired chief executive Calin Rovinescu announced he would donate his bonus to the Air Canada Foundation. He took a 35% pay cut last year. Rovinescu is now Chancellor of the University of Ottawa.
“2020 was all about preserving the company and mitigating the disastrous impacts of COVID-19 during the most complex and unprecedented circumstances ever to impact commercial aviation and Air Canada,” Rovinescu said in a statement. “We grew the airline and evolved into a global champion over my 12 years as CEO, one that represents Canada well nationally and internationally. I continue to be extremely proud of the outstanding work of Air Canada’s leadership team and employees throughout the uncertainty of the last 18 months. Accordingly, given the considerable confusion, misinformation
and public disappointment regarding these compensation plans, and to support my former colleagues I will donate my entire 2020 bonus and SAUs to the Air Canada Foundation.”
The federal ministers responsible for negotiating the aid package with Air Canada welcomed the news.
“While this situation could have been entirely avoided by Air Canada, we acknowledge this step in the right direction,” Finance Minister Chrystia Freeland and Transport Minister Omar Alghabra said in a joint statement Sunday.
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