Air Canada AC-T paid chief executive officer Michael Rousseau $12.38-million in 2022, the first full year after the federal government lifted restrictions on the airline’s compensation practices as a condition of its pandemic-related bailout.
The pay package represented a 233-per-cent raise over Mr. Rousseau’s 2021 pay levels. That year, Air Canada paid him just $1-million in salary and stock awards, with the remainder of his compensation coming from an increase in the estimate in the future cost of his pension, given his 2021 promotion to CEO.
The company said last year it would return to normal compensation practices in 2022 after controversies over its pandemic-linked pay. In May, 2021, it revealed it paid top managers $10-million in “COVID-19 pandemic mitigation bonuses” for 2020 as it negotiated a multibillion-dollar bailout with the federal government. The $5.9-billion COVID-19 rescue plan for the airline, announced in April, 2021, included limits on executive compensation.
The bonuses drew widespread public criticism, including sharp rebukes from Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland, and a formal denunciation from the House of Commons. Chastened, the top of the Air Canada executive team gave back $2-million in bonuses and some of their stock awards.
In November, 2021, Air Canada cancelled the government credit line that placed the restrictions on compensation, clearing the runway for the pay liftoff.
Mr. Rousseau’s total compensation for 2022 included a $1.3-million salary, share and stock option awards valued at $7.8-million, and a bonus of $2.28-million, according to the company’s proxy circular released Friday.
Air Canada said it paid out the maximum possible bonus for financial performance because it lost less money than forecast. The company set a goal of an adjusted pretax loss of $1.25-billion, but lost $952-million instead. In 2021, Air Canada lost $3.77-billion by that measure. The financial goal represented half of the executives’ target bonuses.
The plan resulted in annual bonuses ranging from $472,500 to $654,500 for four other Air Canada executives. Their total pay ranged from $1,998,500 to $3,104,100 and their raises ranged from 88 per cent to 165 per cent.
Canadian public companies are generally required to disclose compensation for the CEO and four others, called “named executive officers,” or NEOs. Other top executives’ pay is not revealed.
Air Canada says the committee and the full board believe the executives’ compensation in 2020 and 2021 is not comparable to 2022 or any future years.
The board of directors’ human resources committee, which recommends pay decisions to the full board, “determined that the NEOs’ contribution and performance was exceptional in 2022, particularly given the challenging headwinds the corporation and industry faced entering 2022 and continued to experience over the course of the year,” the proxy circular said.
“Mr. Rousseau, with the support of our other NEOs, led Air Canada to meaningfully improved financial and operational results in 2022, including significant year-over-year improvements,” the circular said.
Travellers returned to the skies in the summer of 2022 after more than two years of pandemic restrictions. The surge ran into poorly staffed airlines and airports, causing jammed terminals, delayed flights and countless tales of disrupted holidays.
Air Canada lost $1.7-billion in 2022, including a foreign exchange loss of loss of $732-million. As demand for travel resumed with the easing of the pandemic, 2022 passenger revenues more than tripled to $14-billion and seat capacity rose by 2.5 times.
Canada’s flag carrier in late 2021 pulled out of the government’s pandemic bailout program, forgoing $3.975-billion in interest-bearing financial aid but drawing $1.4-billion to provide customer refunds.
As part of the aid package announced in April, 2021, the federal government took a $500-million stake in Air Canada at $23.18 a share. The shares traded at $18.58 on Thursday on the Toronto Stock Exchange.