Canada’s Prime Minister and Finance Minister have harsh words for Air Canada following reports in the Globe & Mail this week that the carrier paid $10-million in “COVID-19 Pandemic Mitigation Bonuses” to executives earlier this year, while it was negotiating a rescue package from the federal government.
The APR financial bailout agreement – worth nearly $6 billion – contained limits on future executive compensation.
During Question Period in the House on Wednesday, Prime Minister Justin Trudeau said the executive bonuses were “completely unacceptable,” adding that Canadians were owed an explanation.
Finance Minister Chrystia Freeland had even more to say at a news conference on the same day.
“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,” she told media.
“Canadians are smart,” she added, “We really are a country that believes in doing the right thing.”
Freeland also pointed out, “Our equity stake also means we are now, as the government, an important shareholder in Air Canada. 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.”
The Globe & Mail report quotes an Air Canada circular where the board explained the bonuses, saying executives “reacted urgently, decisively and skillfully to mitigate the impact of the COVID-19 pandemic on the company,” taking measures that included reducing its staff by 20,000.
The report also says the board approved $20 million in bonuses “compared with the potential bonus pool of $45 million” but ended up paying $10 million, including nearly $2 million to the company’s top five executives. Some Air Canada executives had waived compensation during 2020, but the Globe says, “on Dec. 31 – the last day of the 2020 pay cuts – Air Canada handed out special “stock appreciation units” to the affected executives, giving them “the opportunity to recuperate their foregone salary.”
No Comment from Air Canada
Open Jaw reached out to Air Canada and was told Thursday morning by a spokesperson that, “At this point we have no comment to offer.”