Air New Zealand hits back at union claim Government bailout money is 'lining the pockets' of airline executives

E tū union members say shares given to executives is rubbing salt in the wound of redundant employees.
E tū union members say shares given to executives is rubbing salt in the wound of redundant employees. Photo credit: Newshub.

Air New Zealand board chairperson Dame Therese Walsh has pushed back at claims Government money is being used to "line the pockets of the senior management" by employment union E tū.

The union claimed on Tuesday that share offers being made to airline executives was "rubbing salt into an already painful wound" the thousands of Air NZ employees made redundant this year due to the COVID-19 pandemic.

In a statement to Newshub, Dame Therese said Air NZ's approach to executive remuneration is in line with the standards for public companies, is reviewed annually by the board of directors and is disclosed in the company's annual report.

A release from the E tū said members were "incensed" over the multi-million-dollar share offer given to the airline's CEO and executive team. The union said that with around 4000 of the airline's crew having lost their jobs this year, the share offer was "tone-deaf".

Dame Therese said the share offers are performance-based and are not in any way connected to the Government bailout loan.

"In essence, if the company is meeting its objectives, then the executives will be remunerated accordingly. However, if the company is falling short of its performance targets, such as now during this COVID-19 crisis, the incentives are at risk," the statement said.

"In fact, the short-term incentive has been cancelled for 2020 and 2021 and the long-term incentive due to vest in 2020 failed to meet the performance criteria. This means executives will not be paid any short-term or long-term incentives this year."

On Friday, the New Zealand stock exchange showed Air NZ CEO Greg Foran issued with rights to around $2.03 million worth of shares. The airline says his total compensation for 2020 will be around 40 percent of his target remuneration.

Six other members of the executive team were also issued rights of a lower value.

Jennifer Sepull, Cam Wallace, Gregory Foran, Leanne Geraghty, Carrie Hurihanganui, Jeff McDowall and David Morgan are all named in documents provided to the NZX on Friday.

"What we disclosed to the NZX last week was the long-term incentive share rights for 2020 which mature in 2023. This will not result in any payments being made until 2023; and then only if the company has met its rigorous performance targets. If in 2023 the company is not performing above target, those share rights will lapse," Dame Therese said. 

"The Government loan is not in any way being used to fund these incentives."

She added that Foran and the other executives "play a critical role in navigating our airline through one of the most difficult periods in its history".

"The board is confident that the compensation approach appropriately incentivises the management to outperform for the benefit of all shareholders, employees and customers."

E tū has yet to respond to Dame Therese's statement.