COVID loans cost Transat exec $489K
Terms of federal bailout cap CEO’s pay at $1 million
Federal loans to Transat A.T. Inc. cost the tour operator’s CEO nearly half a million dollars in compensation last year, thanks to conditions on the pandemic funding.
Strings attached to $743 million in emergency loans from Ottawa deprived chief executive Annick Guérard of $489,500 in cash in 2023, according to a document prepared by the Montreal-based company for its shareholders.
Transat secured loans under Ottawa’s Large Employer Emergency Financing Facility (LEEFF) program in 2021 and 2022 as COVID-19 border closures battered the airline industry and pushed the travel outfit to suspend operations for six months.
The loans required companies, including Air Canada, Porter Airlines and Sunwing Vacations, to cap total compensation for senior executives at 2019 levels, or $1 million if they joined the top ranks after that time.
To encourage executives to stay on board at a shaky time, Transat offered them three-year deferred bonuses in 2020. But because the loan has yet to be paid off, its restrictions still apply, leaving Guérard with $1.9 million in total compensation.
“In the case of Ms. Guérard, as the LEEFF loan had still not been repaid, payment of the 2020 (longterm incentive plan) owing in January 2023 in the amount of $489,523 was incompatible with the consequences of and compensation restrictions imposed under the LEEFF loan. She was therefore unable to receive this amount,” the circular to shareholders states, ahead of their annual meeting on April 23.
The cash bonus is payable only “if the objectives related to operational and strategic priorities and financial performance are achieved,” it notes.
Transat has struggled to get off the ground smoothly post-pandemic, as fears of a flight attendant strike and several grounded Airbus planes due to an engine recall ate away at bookings last quarter.
Transat swung to a loss of $61 million in the three months ended Jan. 31, worse than the $56.6-million loss of the same period a year earlier. Transat has cleared a profit only twice in the past 17 quarters.