Air France-KLM CEO Forfeits Bonus Under Dutch Pressure
The Dutch parliament demanded on Thursday that the boss of Air France-KLM waive a “bonus” of 2 million euros in compensation. A majority of the deputies support the motion of the radical left party SP, and call on the outgoing Minister of Finance Wopke Hoekstra to ask Paris to withdraw this bonus. “The lower house will be informed of the implementation of this motion,” said a spokesperson for the minister.
In a parliamentary debate on Tuesday, Wopke Hoekstra spoke against bonuses in these times of crisis but warned that ending all support could spell the end of KLM and its thousands of jobs. The Dutch Parliament for its part threatened to block any new public aid to the group, hard affected by the Covid-19 crisis, if ever this bonus was accepted by the leader of Air France.
A bonus in addition to his fixed salary
The CEO of Air France-KLM, Ben Smith, was granted, subject to conditions, a “long-term variable compensation” which reached 2 million euros for 2020. This provision was voted on March 19, 2020 in Board of Directors.
The remuneration of the boss of Air France breaks down into three components: a fixed salary, a variable (the bonus) and a deferred remuneration which is therefore contested in the Netherlands. On the first two parts, Ben Smith announced on April 23, 2020 that he would forgo his bonus for 2020 in the context of the crisis and impose a 25% cut in his compensation.
“This bonus is a middle finger for Dutch society”
The Franco-Dutch group, in the red of 7.1 billion euros in 2020, is hard hit by the crisis and has warned that its operating loss would reach 1.3 billion euros in the first quarter of 2021. “During this time, the bosses continue to use. This is scandalous and the SP demands that the bonus be completely withdrawn, ”Dutch MP Mahir Alkaya said in a statement.
“This bonus is a middle finger for Dutch society and in particular for all those in the aviation industry who have to fear for their jobs,” he continued. “If the CEO does not waive his bonus, no more Dutch state aid pennies will be paid to the Air France-KLM holding,” he added in a tweet.
10 billion euros in loans to Air France-KLM
Faced with the health crisis, the French and Dutch States granted more than 10 billion euros in loans to Air France-KLM in 2020. The group on Monday completed a capital increase of just over one billion euros, including 593 million from the French state.
The Dutch state, which held 14% of Air France-KLM before the capital increase, has decided not to participate and will therefore find itself mathematically diluted, to 9.3% of the shares.