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Air New Zealand’s board is under attack by unions and investors for issuing stock options to senior executives.
Greg Foran, CEO of AirNZ.
Photo: RNZ / Dan Cook
The airline’s board last week approved the issuance of stock options to CEO Greg Foran and six other executives, one of whom has since left, worth more than $ 2 million.
The E tū union, which represents some Air NZ staff members, said performance rewards were insensitive and the board seemed “deaf” to what the staff was going through.
The union’s chief of aviation, Savage, said members had waived salary increases and performance bonuses to help the airline.
“For the board and executives to take stock options at this time will do nothing to rebuild the airline’s performance. Workers are outraged, it is pouring salt on an already painful wound.”
The airline laid off more than 4,000 employees, cut expenses and services to save cash, and began obtaining a $ 900 million government loan.
The Simplicity Kiwisaver scheme has about $ 5 million in stock in the airline, and its chief executive, Sam Stubbs, also demanded an explanation.
“The first rule of leadership is that leaders eat last, and that doesn’t seem to be the case here,” said Simplicity CEO Sam Stubbs.
“It raises questions about corporate governance – why this decision was made, why management accepted these options – and the government, which is a 52 percent shareholder, should ask these questions as well.”
In a statement, Air New Zealand’s chairwoman of the board of directors, Dame Therese Walsh, said the national airline’s approach was in line with the standards for public companies, and the board of directors reviewed it annually.
“Executive compensation is disclosed in the Annual Report … half of the executive team’s annual compensation is at risk through short-term cash incentives and long-term stock incentives,” said Dame Therese.
“It’s important to note that the CEO’s total compensation for 2020 will be around 40 percent of his target compensation.
“What we disclosed to the NZX last week was the long-term incentive share rights for 2020 that expire in 2023. This will not result in payments being made until 2023; and only if the company has met its rigorous targets for performance. In 2023, the company is not performing above target, those share rights will expire. “
He said the loan offered by the government was not being used in any way to finance the incentives, and the board was confident that the approach adequately incentivized the airline’s management to perform better.
