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Air New Zealand has been labeled “deaf” for issuing top executives millions of dollars in stock options while workers forgo pay raises and sign up for benefits.
Last week, Air New Zealand CEO Greg Foran received enforcement rights worth more than $ 2 million based on the company’s current share price.
Six other executives, including former executive Cam Wallace, also received lower-value execution rights.
E tū union’s director of aviation, Savage, said union members waived salary increases and did not collect contractual performance bonuses to help the airline save money.
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Air New Zealand has been cutting costs across the business, including reducing its workforce by more than 4,000 employees in an effort to survive the coronavirus pandemic.
The airline recently confirmed that 385 additional international cabin crew would be laid off, along with 550 licensed international cabin crew, who have not worked since July.
Workers described the airline’s decision to issue performance bonuses as “muffled,” Savage said.
“The workers are outraged, it’s putting salt on an already painful wound,” Savage said.
Ricky Wilson / Stuff
Air New Zealand CEO Greg Foran makes about $ 4.5 million a year.
In August, Air New Zealand posted a loss of $ 454 million for the year through June 30, the first time it has been in the red since 2002. The company’s shares have halved since the beginning of the year. .
The airline is 52% owned by the government and in March negotiated a Covid-19 support loan of $ 900 million from the Crown.
It also received $ 117 million in salary subsidies from Covid-19 and its international operation is being subsidized by a government air transport scheme.
Savage said the union will discuss the stock offerings with Finance Minister Grant Robertson.
“Air New Zealand has used its government loan and it appears that this public money is now being spent to line the pockets of top management,” Savage said.
Savage said the stock options would do nothing to rebuild the airline’s performance and reinforced the view of union members that the company’s strategy needed a complete overhaul.
The rights were approved by the company’s board of directors on October 8.
The rights issued grant executives the right to receive shares in the company subject to certain performance conditions being met as of September 15, 2023.
An unidentified worker said some teams had to rely on benefits because their income had decreased.
The rights issue went against Air New Zealand’s internal program around rebuilding and supporting staff to take care of customers, they said.
“I have never seen the crew so upset as they were on the weekend. It’s just another kick while they’re already down while crew numbers are being decimated, ”the worker said.
Abigail Dougherty / Stuff
Air New Zealand President Dame Therese Walsh says Air New Zealand’s approach to executive compensation is in line with standards for public companies and is reviewed annually by the board.
Board chair Dame Therese Walsh said the government loan was not being used to fund the incentives.
“The board is confident that the compensation approach appropriately incentivizes management to achieve superior performance for the benefit of all shareholders, employees and customers,” said Walsh.
Foran and his executives were playing a pivotal role in leading the airline through one of the most difficult periods in its history, he said.
He said that if the company did not meet its performance targets, the incentives were at risk.
“In fact, the short-term incentive has been canceled for 2020 and 2021 and the long-term incentive due to consolidation in 2020 did not meet the performance criteria.”
That meant executives would not receive short- or long-term incentives this year, he said.
Foran’s total salary for 2020 would be about 40 percent of his target compensation, he said.
Ricky Wilson / Stuff
Simplicity CEO Sam Stubbs says “leaders eat last” and Air New Zealand executives should not have accepted the options.
Sam Stubbs, managing director of KiwiSaver’s Simplicity Ethics Fund, has written a letter of explanation to Air New Zealand’s board of directors, asking whether executives had the option of not accepting the rights and whether the board considered such compensation to be beneficial to shareholders. and the personal.
Simplicity has 50,000 KiwiSaver members and mutual funds, who own Air New Zealand shares worth $ 5 million.
Talking to Things Stubbs said accepting the rights seemed somewhat inappropriate considering the circumstances at Air New Zealand.
“This is a very inappropriate gesture at a very sensitive time,” Stubbs said.
“Shareholders and government should ask Air New Zealand’s board and management questions how they might think it is appropriate.”
Management’s decision to proceed with the rights issue would negatively affect staff morale and was bad for shareholders, including the government, because it diluted shareholder value.
“Air New Zealand’s board of directors and management must understand that they are held to a very high standard because we are talking about taxpayer money and KiwSavers.”
Air New Zealand was an iconic New Zealand company and New Zealanders expected the best from it, he said.
“For a company called Air New Zealand, this seems to be something very different from New Zealand.”
