Air Canada is providing updates regarding its 2020 compensation outcomes and announcing additional actions being taken by its Senior Executives.
Summarized below are the key facts about the 2020 bonus payments and share appreciation units. Additional details about Air Canada’s and its Board of Directors’ practice and approach to executive compensation are contained in the company’s Management Proxy Circular dated May 6, 2021 and available at www.sedar.com.
- The 2020 compensation outcomes for all Air Canada employees were among the many important decisions made during the pandemic in the best interest of Air Canada and its stakeholders.
- 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.
- They were consistent with compensation outcomes at companies that also suffered significantly during the pandemic and comply with all of the company’s agreements and any applicable filing or other requirements.
- Air Canada worked hard to preserve as many jobs as possible through the pandemic, with employee retention being a critical priority to enable continued operations through this extended crisis and to prepare for sustainable emergence from the pandemic.
2020 COMPENSATION PROGRAMS:
- The $10 million bonus program was designed to provide relief and retention amounts for over 900 Air Canada employees. It is worth highlighting that more than $8 million of this amount was awarded to middle management (excluding executives). These amounts were in recognition of their work at a time of great dislocation and high risk for the organization.
- In 2020, Air Canada raised through private sector sources some $8 billion to help stabilize its finances during the pandemic. No taxpayer dollars or funds from the Canadian government sector support package are being used to fund these bonus arrangements for Air Canada employees or executives.
- In early 2020, senior executives and 3,200 management employees voluntarily agreed to total reductions of $11.5 million in their base salaries, subject to compensation through share appreciation units that might allow employees to recover some of the foregone salary if – and only if – the share price is higher by December 2022 as compared to December 2020.
CONCLUSION AND ADDITIONAL ACTIONS:
Every step of the way, management and the Board have acted in the best interests of Air Canada and its stakeholders and have been mindful of their role in mitigating the consequences of the pandemic. Throughout 2020, Air Canada has accordingly sought to do its part, such as by flying repatriation flights to bring stranded citizens home, operating cargo flights to bring much needed PPE to Canada and leading the way in Bio-safety medical studies and protocols, and it will continue to do so.
Unfortunately, there is now public disappointment around the actions relating to these 2020 executive compensation outcomes. 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. In addition, former Air Canada President and CEO Calin Rovinescu who retired in February 2021 will be donating the value of his 2020 bonus and share appreciation units to the Air Canada Foundation.
Read Mr. Rovinescu’s full statement below:
CALIN ROVINESCU TO DONATE 2020 B0NUS AND STOCK APPRECIATION UNITS TO AIR CANADA FOUNDATION
Following Air Canada’s statement regarding its 2020 compensation plan and the decision of its current senior executives to return their bonuses and Stock Appreciation Units (SAUs) to the company, Calin Rovinescu, who retired as President & CEO last February, will donate his entire 2020 bonus and SAUs to the Air Canada Foundation. The Foundation provides financial or fundraising support to Canadian-registered charities focused on improving children’s health and well-being and also partners with Canadian NGOs in times of disasters both locally and internationally and supports major health-related causes. The 2020 compensation plans were approved by Air Canada’s Board of Directors in mid-2020, well before any discussions with the Canadian Government on sector support. Over 900 management employees were included in the 2020 Bonus Program, all of whom had also agreed to salary reductions, with the opportunity for some recovery if Air Canada’s stock price improved between December 31, 2020 and December 31, 2022. The Bonus Program was adopted by the Board of Directors to recognize the work of key contributors in stabilizing the company. In the case of Mr. Rovinescu, as set out in Air Canada’s 2021 Management Proxy Circular, he had agreed to a salary reduction of $490,000 or 35% of his total fixed compensation for the year. Following on the decision of his former colleagues, Mr. Rovinescu has decided to donate his entire 2020 bonus award as well as his SAUs to the Air Canada Foundation and has requested that no charitable tax deduction receipt be issued to him in connection with this gift. “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. 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. I know the funds will be put to good and appropriate use during these difficult times” said Mr. Rovinescu