The CEO of Air Canada, Calin Rovinescu, has received a pay package worth $12.9 million CAD ($9.7 million USD) for 2019, the highest in his 11-year tenure at the airline. This comes despite the Canadian government’s recently imposed restrictions on executive compensation for companies that have received financial aid due to COVID-19.
Air Canada received a $492 million CAD ($365 million USD) loan from the government to help the airline weather the pandemic. As a condition of the loan, the government imposed restrictions on executive compensation, including limits on severance pay and share buybacks. However, the restrictions do not apply to Air Canada’s CEO, as he was not a recipient of the loan.
Rovinescu’s pay package consists of $1.4 million CAD ($1 million USD) in base salary, $5.6 million CAD ($4.2 million USD) in share-based awards, and $5.9 million CAD ($4.4 million USD) in “other compensation,” which includes benefits, pension contributions, and “other taxable benefits.”
Critics have questioned the timing and size of Rovinescu’s pay package, given the financial struggles faced by the airline industry as a result of the pandemic. Air Canada has reported losses of $1.2 billion CAD ($900 million USD) in the first quarter of 2020.
In a statement, Air Canada defended Rovinescu’s pay package, stating that it reflects his “significant contribution to the airline’s continued growth and success over the past decade,” and that his compensation is “performance-based.”
Air Canada is not the only Canadian airline to receive financial aid from the government. WestJet also received a $348 million CAD ($259 million USD) loan, and Porter Airlines received a $135 million CAD ($100 million USD) loan. Both airlines have also faced criticism for executive compensation during the pandemic.
The Canadian government has faced pressure to impose stricter limits on executive compensation for companies receiving financial aid. In May, Prime Minister Justin Trudeau announced that companies receiving the Canada Emergency Wage Subsidy would have to publicly disclose the salaries of their top executives.
In June, the government announced that companies receiving the Large Employer Emergency Financing Facility, a $60 billion CAD ($45 billion USD) loan program for large companies affected by COVID-19, would be subject to stricter limits on executive compensation. The restrictions include a cap on annual salaries and bonuses for the top five executives, as well as limits on severance pay and share buybacks.
Overall, the issue of executive compensation during the pandemic has been a contentious one. While some argue that executives should not receive large pay packages during a time of financial hardship for their companies and employees, others argue that performance-based pay is necessary to incentivize executives to make difficult decisions and lead their companies through difficult times.
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