Air France-KLM: three questions on the bonus of 2 million euros from Ben Smith which still does not pass

The remuneration of the bosses again questioned. The Air France-KLM general assembly will take place on Wednesday May 26 at Roissy. It will be devoted in particular to the controversy around the premium of two million euros bonus for the boss of the airline company Ben Smith. A bonus very frowned upon by the Netherlands because of the losses of the airline and the public aid to save it. We explain the controversy to you.

What do Dutch deputies blame the boss of Air France-KLM for?

Dutch MPs were the first to sound the charge, denouncing a scandalous bonus. Part of Ben Smith’s compensation has come under fire. This gave some great moments of parliamentary eloquence in The Hague (Netherlands), when the deputy Mahir Alkaya denounced from the rostrum “a middle finger to Dutch society.” His party passed a motion asking his government to oppose the remuneration of Ben Smith at the Air France-KLM general assembly, under penalty of suspending all future public aid to the group. Air France is still burning 10 million euros a day at a loss.

The bonus Ben Smith denounced by the Dutch deputies, in reality, is not one: it is a variable part of his remuneration, which appears in his employment contract, which is called long term. This is an amount that will be paid to him later, not before 2023 and under conditions. First, he will need to be still in office, and second, he will have to meet economic objectives. If he succeeds, he will be entitled to this title, to two million euros.

How does Ben Smith respond to these accusations?

Ben Smith counter-attacks by evoking a regrettable controversy. He recalls that he has already made personal financial sacrifices: he lowered his fixed salary from last year by 25%, waived his bonus (the real one) in 2020, and recalls that he invested for 900,000 euros of Air France-KLM shares. For now, it is an investment that is based on faith in the future because the group has not paid a dividend for 10 years.

The fact remains that with a total of a million and a half in the 2020 financial year, Ben Smith touches three times more than the boss of the SNCF. But if we compare with his counterparts in the airline sector, he is paid half as much as the bosses of Lufthansa and the parent company of British Airways, IAG.

Have other leaders been criticized?

Ben Smith is not the only boss heckled this year in general meeting, and it is a sign of dissatisfaction of the shareholders. Because of the crisis, they have fewer dividends to share and therefore find it more difficult to swallow executive compensation. About a third of the AGMs of the main French companies have already taken place and according to the specialist magazine The weekly GA, the approval rate of executive compensation fell, for example, by ten points in the CAC 40.

The shareholders do not particularly appreciate that the directors modify the criteria for the allocation of their variable portions during the financial year. Thus, we are witnessing disputes at Pierre et Vacances, Véolia, TF1, Axa or even Accor… But it should be remembered that these votes on executive compensation are only advisory.

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