Air Canada says its top executives will return the bonuses they received through the COVID-19 pandemic following “public disappointment” over the pay plan.
The Montreal-based airline had previously approved a “COVID-19 Pandemic Mitigation Bonus” for its management team, awarding $10 million “to those individuals who were instrumental in the survival of the company during the COVID-19 pandemic.” The compensation plan, which was outlined in its 2020 proxy circular, also provided executives with share appreciation units (SAUs).
Despite saying the compensation scheme was “consistent with outcomes at companies that also suffered significantly during the pandemic,” the airline has decided to scrap the plan.
“Unfortunately, there is now public disappointment around the actions relating to these 2020 executive compensation outcomes,” the airline said in a statement released Sunday.
“As an acknowledgement of this, and 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’s former chief executive Calin Rovinescu, who retired in February, will also donate the value of his 2020 bonus and SAUs to the Air Canada Foundation, citing “considerable confusion, misinformation and public disappointment regarding these compensation plans.”
“I know the funds will be put to good and appropriate use during these difficult times,” Rovinescu said in a separate statement.
Air Canada found itself at the centre of public backlash over the bonus plan, which was doled out as the company negotiated a $5.9 billion financial aid package from the federal government. Last week, Finance Minister Chrystia Freeland signalled her disappointment over the multi-million dollar packages, calling the bonuses “inappropriate.”
Under the terms of the financial aid package from Ottawa, Air Canada agreed to restrict dividends, share buybacks and executive compensation. Senior executive total compensation at the airline is capped at $1 million for each as long as Air Canada is using the loan facilities.
Freeland and Transport Minister Omar Alghabra said Canadians “are right to expect responsible corporate behaviour — particularly with respect to executive compensation — from companies receiving government financial support during the pandemic.”
“While this situation could have been entirely avoided by Air Canada, we acknowledge this step in the right direction by the top five executives to repay 2020 bonuses and share appreciation units they received,” they said in a joint statement Sunday night.
Reference: Yahoo Finance