Similar conversation happening in Canada (but no repayment):
"Bloc Québécois MP Xavier Barsalou-Duval put forward the motion, which states “that this House condemn the decision of senior management of Air Canada to pay themselves $20 million in executive bonuses when they’re received $6 billion in public assistance.”
Air Canada informed shareholders on Monday that its top executives and managers were getting a combined $10 million in stock options and bonuses for their response to the COVID-19 pandemic."
The issue is (only slightly) more nuanced: while the executives collected bonuses, they did go for a few months without pay and their overall bonus' for 2020 were lower than in previous years.
It does reveals the reality of our managerial class--in a sort of distributed, quasi-feudalism they are entitled (legally and practically) to extract massive amounts of wealth from large corporate entities regardless of any negative impact on the company.
- Running the business into the ground (Target Canada)
- Running the business into the ground while underfunding the company pension (Sears)
- Lobbying for billions of dollars of tax dollars while cutting thousands of jobs (Bombardier, Air Canada)
But giving the money back now would bankrupt the company, which no government would do. And since the people involved are powerful donors, no politician will even mention holding the people responsible.
Air Canada/France/whatever is not just a company. It's an important aspect of globalisation and the country whose flag it carries treats it as such. Transformation into a formal corporation is usually a ploy to make it cost effective. And, in many countries, is only partial, often resulting in the worst of both worlds.
If a company receives federal aid, or their employees receive federal aid due to low pay ex Walmart in the US, they should have to cap payouts. Maybe based on a ratio to the lowest paid employee or federal minimum wage. Make execs lobby to raise the minimum wage so they can increase their bonus or something.
> Maybe based on a ratio to the lowest paid employee or federal minimum wage. Make execs lobby to raise the minimum wage so they can increase their bonus or something.
Using the lowest paid employee ratio results in companies outsourcing the low pay jobs so that this ratio looks better. For example janitorial jobs.
Don't give up so easy. Let there be a contract defining a minimum wage that companies can sign up for. Then forbid tier 3 companies from outsourcing anything to tier 1 or doing work for tier 5.
Alternatively the law can be written so that the multiplier is against the greater of (1) the lowest paid domestic employee, or (2) the prevailing wage of the lowest paid foreign employee if they were domestically employed. Something like that, anyways.
They can use multiple levels of indirection to skirt these laws. Form a separate legal entity or contract a company that contacts another company that employs the low income workers. Just too many ways to skirt the problem. Just simply mandate livable wages.
It's overly simplistic but I'd try to change things such that:
- if the company is asking for aid or corporate welfare, bonuses for any exec are off the the table. They have to lead by example and take hit, as leaders, before anyone else.
- welfare isn't given to the business directly without strict conditions, and in other ways it is given directly to everyone through payroll.
- the government has the backbone to actually enforce this instead of cowering at the mere sight of money.
It should be harder, almost impossible, for a corporation to receive welfare from the government than an individual person.
Take it further, if the execs are directly responsible for the mess they should also pay for it (for starters by handing over their stocks to government) Skin in the game would allow for even larger bonuses.
"The bonuses, meant to offset the salary cuts the management team took in 2020, were distributed while the company was calling for a bailout from Ottawa. The government agreed to the package on several strict terms, including guaranteed refunds for customers and a cap on executive pay.
But the terms of the deal do not apply retroactively. Moving forwards, under the bailout agreement, executive compensation at Air Canada must be capped at $1 million per year until all government loans are repaid."
The government did cap the salaries, I've not done any super deep research but from the articles I've read, I've not been able to figure out how this was allowed.. except this article that mentions that they're not applied retroactively, and that the payout was because the exec team went without salary. Not totally clear in the Canadian press how the whole thing actually panned out at the end of the day. (fwiw: I didn't post my original comment as an opinion on the situation, only that a similar conversation is happening in the Canadian press. :))
Or maybe don't pay any federal aid at all. It rewards bad business, hurts competition and obviously doesn't even work. Instead:
- Give aid directly to the employees who need it instead of relying on the trickle down myth
- Buy shares to inject capital into companies as a form of financial aid but get something in return for the people who have to pay for it
- Never let companies get big enough that a bailout is necessary in the first place
- Let businesses fail and get bought by more competent competitors like the market economy doctrine dictates
- Prohibit foreign takeovers
The fact that that even needed to be specified was pretty bad, the money was clearly earmarked for companies to spend on their regular employees to avoid lay-offs. Booking paying it out to their execs was absolutely mis-appropriation in every sense of the word, and only absolutely massive backlash here and significant talk of boycotts, including on national TV, is what turned them around on this.
Booking.com are masters of tax avoidance and I'd guess all of their usual bonuses are essentially covered by Dutch state aid in the form of reduced taxes.
> Het niet uitkeren van bonussen was overigens door het ministerie van Financiën niet als harde eis vastgelegd in de voorwaarden voor de NOW-regeling waar Booking gebruik van maakte. Hoekstra had simpelweg de Kamer laten weten dat het “niet de tijd voor het toekennen en uitkeren van bonussen” is. Wel een harde eis was dat ontvangers van de staatssteun ten minste drie maanden lang niemand mochten ontslaan. Booking hield zich hier exact drie maanden aan, direct erop volgde een reorganisatie waarbij bijna 26.000 mensen hun baan verloren. Dit betrof ook zo’n duizend mensen op het kantoor in Amsterdam, de meesten van hen maakten gebruik van een vrijwillige vertrekregeling.
Correction: I understand it to be a quarter of staff (the total staff being 26000). So the article is pretty grossly wrong in an important and obvious detail. Not sure how much I'd trust it on the more nuanced but.
(Former booking employee here, but not for several years)
That guy is brilliant and probably the best thing to have ever happened to Nissan and Renault.
The airline execs, on the other hand, ran a glorified bus service in a year where business was so bad that the government had to give them more money than the IMF loans out to entire countries.
AC are particularly disgusting, because their execs spent the last year posting sob stories about how the Canadian government was forcing them to lay off their brave staff (going so far as to convince the people they were firing to post on linkedin that it was all the government’s fault)
Was listening to CBC and they made an excellent point. Which is that the Air Canada board of directors has nobody on it from any union or "representing" the employees. When you look at the compensation committee you see other people in executive roles.
Could you see any union representative on the board of directors voting for executive bonuses after they layoffs over the last year. Until such biases at the BOD level are addresses you will only continue to see similar actions.
It must be so nice being a corporation and saying "oops, our bad, we'll get right on it" instead of going straight to prison if I were to personally defraud a state of so much money.
This is just PR damage control. Apparently someone calculated the loss would be more than the 65M so instead of reducing the exec payout they just pay back the money.
This is why they should be given something like a DDTL so they have to display a need for money but have assurance that the lending facility is available
That’s an almost sociopathic way of looking at society. Government is the organization that we, the people, have created to accomplish our common goals. If you think that government is just a big fat cow that needs to be fleeced, and that people who are doing just that are worthy of praise, then I consider you with the same esteem as someone who steals from their neighbors.
I think that the problem lies with the the voters and politicians who set up programs with explicit purpose of giving cash to mega corporations that don't need it. It isn't reasonable to put out a sign that says "free cows" and then blame the those who apply for and receive the cow.
The solution is to stop giving handouts to corporations with billions in profit, not rely on them to refuse the free money.
It was given to them because the travel branch was hard hit due to COVID and the government handed out this money to avoid lay-offs. In no way was it intended for bonus payments, the fact that that wasn't forbidden doesn't mean it was permitted.
This money came with some very explicit strings attached about what it was intended for, that you weren't allowed to go buy yachts with it was not made explicit but even so it should be f'ing obvious.
Why do you keep your own tax deductions? Do you think people only kept their stimulus check if they were hard-up for cash?
The tax system isn't about paying what you feel you should owe. The government bailed out an entire industry and tried to pay out (somewhat) evenly over it. Why should some of the companies be obligated to forgo that cash just because they handled the pandemic better than their competitors?
I think this is partly explained by "we need to move quickly to help", versus taking time to design and implement some sort of means testing.
I will note that PPP loans in the US are loans, and are only forgiven if you can link the funds to employees' salaries. The percentage of the loan that can be used for owners' salaries is also capped.
It was given to them to keep on their employees for the duration of the aid. The aid covered up to 90% of salaries, the percentage dependent on the revenue drop during that period.
I am tired of governments deciding to not pursue justice because it would be more expensive, because of the negative impact on the investment climate and the litigation costs. Justice isn't meant to be profitable. Let's bite the fucking bullet and jail the people responsible for this kind of behavior
It would be negligent on the booking.com executives behalf if they did not take this money when it was available. If there's an issue, it's in the relief program itself.
If they retained their employees and didn't take bonuses as promised, I might agree. But they didn't. They made empty promises, took the money, sacked their employees, and divvied the loot. This isn't even good for shareholders. It's pure narcissistic greed
Plenty of companies did not take government money even though it was available out of solidarity with those companies that did need that money. Booking.com taking that money when they could but didn't need it led to (1) less money available for other companies and (2) a higher deficit.
Since the proper behavior here (sociopathically maximize private profit from socialized care) is so easy to know, the execs should be outsourced or automated.
Also, let them write good documentation up to spec so that the next guy can pick up where they left. Surely some long ago shelved away business logic framework gathering dust some place would be a good place to start.
My joke was that we should write an application called a Manager so that (like with calculators and computers) we can tell future generations the story how a Manager use to be a person.
And while we are at it we might as well build a robot to represent the company. A hundred million customers could talk with the boss simultaneously and it could take proper action instantly.
Here's a little bit of background from an article at the start of the pandemic. The company had originally announced that they would cancel bonuses in exchange for government support. They even promised to protect jobs, which they didn't, and laid off around 5000 anyway.
A quick Google search reveals Booking's net income is two orders of magnitude above those figures. The Dutch State should ask themselves if Booking ever needed those €65M and review the process that got them that money.
I don’t know about the Netherlands, but I’m France for example “innovation subsidies” are basically just a way to give tax breaks to industry. Every company with 100+ employees will have someone working on claiming as many projects as possible as “innovation” and claiming the relevant tax breaks
Very silly, but it does slightly reduce the prohibitive cost of labour
There's a lot of corporate fraud like this, even in countries that have a reputation of being well governed.
I personally saw a respectable Finnish company leeching on government innovation funds, asking employees to log their working hours under a specific project. The kicker - nobody in Finland was working on that project, in reality it was developed in another country.
We have those too in the Netherlands. Even small startup companies can apply and receive these tax breaks when they do technical innovation ('WBSO').
There are also tax-discounts for large and profitable companies ('innovatiebox') that innovate (companies like ASML, NXP) that Booking.com would probably benefit from too.
I'm from an EU country which is quite low on the pecking order. If we offered “innovation subsidies” to our businesses it would be considered state aid and we'd be in infringement.
The "innovation subsidies" are well know in the Netherlands as another tax stealing mechanism. Nobody takes them serious. The same as the intellectual patent laws in NL and Luxembourg. For Booking.com apparently most of their back-end is still Perl....
Are those figures for 2020 / 2021, aka the COVID era?
I don't have those figures either, but at the time I think everybody agreed nobody knew what would happen. Booking.com's revenue might have fallen to close to nil.
Given the choice of paying back the 28 million in bonuses or the paying back the 65 million in state aid, the execs took the hard choice and decided to keep the bonuses.
The successful result of such a lawsuit: average stockholders will get a $12 credit towards their next booking.com excursion. Class action lawyers take their $18M commission. And the execs keep their jobs and those bonuses.
Of course, and it will show great executives what a swell place to work booking.com really is. Even if the comp is a bit low by executive standards, at least they have your back.
Why do you think there was a choice? I don't see anything supporting that in the article.
The governments position was stated as follows:
it was more important to maintain a consistent government than to apply the bonus rule retroactively and without warning.
Seems like the company payback was entirely voluntary and this is an example no good deed going unpunished.
That is sad. We have standards like SI units to help us communicate. Something as wide and non-specialized as Fox News should be using common standards.
Fox News literally had a segment where Tucker Carlson and a guest ranted about how the metric system is a tyrannical globalist plot. I don't think they're interested in such standards.
I do not think the convention of using multiple Ms makes sense anymore in a world of billions and trillions. No reason to use MMM or MMMM instead of k, M, B, T, and eventually Q.
The usage of G is just regrettable, although I guess there is a population that does not associate k with thousand. But that’s more of an indictment in lack of adequate education that they would not have experience with sufficient science courses.
Why is G regrettable? Would you prefer they use K? Or would M be better?
I personally find G for grand to make a lot of sense when talking about money. K doesn't make sense because no one says kilodollars. And M is too easily confused for million.
k is short for kilo, the SI prefix for 1,000. It makes sense that anything with prefix k or kilo is 1,000 of that, and it’s known globally. Grand is American English slang.
Also, the dollar sign prefix tells you you’re talking about money. And M is for million.
> Social Affairs Minister Wouter Koolmees told Parliament there was little the government could legally do to force Booking.com to return the money because the bonus provision was not immediately included in the rules. He said it was more important to maintain a consistent government than to apply the bonus rule retroactively and without warning.
This sounds either lazy or corrupt. There’s no need to retroactively apply the rule, but there are consequences that could be applied in the future, like forbidding companies that used the money for bonuses to apply for other government grants. Doing nothing because it’s “more important to maintain a consistent government” is messed up.
On the other hand, the government in general and the tax authorities in particular have a history of backtracking and retroactively diminishing promised rulings. Refer to the 30% ruling changes that were retroactively applied after employees had moved to the country and had received a signed declaration from the authority.
Agreed, as far as I can see, it was a calculated risk that companies would abuse it. Better to just suck it up and hope for public outrage in some of the more despicable cases, which is just what happened here.
> Agreed, as far as I can see, it was a calculated risk that companies would abuse it
During the announcement of the first support package it was explicitly stated that due to the short time frame they had to operate in, they were taking this risk for the greater good. I believe that in the next support package they immediately made it a lot better w.r.t to abusing support.
Personally I really liked how upfront they were with it.
I don't know much about economics but I do wonder why governments don't finance companies during crises by buying shares, and subsequently recoup our taxes buy selling them in times of prosperity. The UK government did this for the banks in 2008 but have recently been selling shares below market price. Is it corruption or is something you else at play?
FWIW, Germany bought 25% of Lufthansa for 9 billion EUR in summer 2020[0] amid the Covid-19 losses, while the market capitalization was less than 4 billion. So they paid more than double the market capitalization to get a quarter of the company.
Because companies would rather lay people off than sell shares.
Rationally, I think that governments should be ok with that as they will pay either way through unemployment or these rescue packages (at least with some industries where no critical supply chains are ripped out), but there would be enormous political pressure to stem job losses.
"Rationally, I think that governments should be ok with that as they will pay either way through unemployment or these rescue packages"
You are wrong here. The 3rd option is to take money from the investors. The example given in this thread, Lufthansa, the stock holders should have been wiped out. It is called risk.
This reminds me of the Wall Street execs paying themselves huge bonuses after the 2007/2008 bailouts. (And nobody went to jail) The mentality was “The government should have struck a tougher deal!”
One caveat that I haven't seen mentioned yet is that the bonuses were awarded in shares, ie they did not affect Booking's liquidity. Not relevant for every (valid) opinion you might have, but relevant when judging e.g. Booking's consideration between not awarding the bonuses and paying back the aid.
This is so extraordinarily corrupted. Dutch employees of Booking, your income tax on the income above 68k EUR is 51% but don't worry the wealth will trickle down. Just work hard, wake up early, and be nice to people. Not.
"Some 5.8 million euros in shares and cash went to CEO Glenn Fogel, and 2.8 million euros went to Peter Millones, the vice president. Nearly 20 million euros, mostly in shares, went to CFO David Goulden, according to company documents reviewed by NRC"
"Company X got state aid and paid Y in bonuses" seems to be one of those cookie cutter news reports that pop up several times per day the past year. The titles seem to imply that state aid directly went to a few senior executives. Outrage, right?
But why not look past the knee jerk reaction?
1) In most cases I'm aware of, after digging deeper, you find out that the state aid is not for the company - it's for the employees. Running a business is no charity and if you have employees that are superfluous due to current market situation you lay them off unless the cost of retraining future employees is higher than paying operating expenses to have employees around that are not working as much as they used to. State aid can affect the decision by offloading expenses to the state, for employment safety.
2) Bonus payouts may be for last year performance and not related to either covid or the state aid at all. Just because you have two large numbers within the same order of magnitude doesn't mean they are related. Bonuses may have been paid of regardless of state aid.
I think what's really crazy here is that Booking.com would rather lose €65M than not pay executives €28M in bonuses (for a total loss to corporate coffers of... €93M?).
Sure, state aid is "for the employees", but in most of these cases: The company obviously could've paid them anyways, since they had this much spare compensation for their rich executives, and that the company continued to benefit from the labor of employees that the government was paying the salaries for.
The government, and by proxy, the taxpayers, end up doubly screwed over, while the corporation gets to continue to enrich itself, and enrich its executives, who are already wealthy.
Rather than give corporations huge blank checks, governments should've sent that money directly to individuals, and allowed corporations to fail or not as per usual. Most of these companies would still exist anyways, since they have plenty of money.
I can't speak for this situation in Europe, but with the US PPP loans, companies basically had 2 months of their payroll paid for. This also means that got 2 months of free labor.
With the no payroll costs, where does that "extra" payroll money that would/should of gone to payroll go? Investors? Executives?
You're correct that the state aid was intended for employees, yet it was given to booking.com and not on the people's personal bank accounts. They were more or less free to do with that as they saw fit; the only condition was that they couldn't fire people for 3 months (did did fire ~25% of the work force after those 3 months).
In this case, they changed their own rules regarding bonuses on account of being an exceptional situation and that, apparently, these bonuses were desperately needed. How many of those 25% of people could they have retained if they didn't pay millions in "desperately needed" bonuses (not all were in shares btw)?
The original reporting[1] was fairly detailed with specifics, subsequent reporting left out some that; you know how these things go... There is some nuance here, but it's still leaving a really bad taste in my mouth.
But to be fair, I find it hard to blame just booking.com for this because it's the entire culture that's just rotten IMHO. It's all "free market" this and "no government interference" that but then also "plz government help us" when things go belly-up. When people point out the hypocrisy it's "for the employees, not the company!" True, but misses the larger picture IMO. "Running a business is no charity", well apparently it is because the tax payer will happily get you out of trouble with the "but think of the employees!" emotional blackmail argument only to have them turn around with "free market!!!" a few months later while swimming in their obscene and unnecessary stacks of money.
And to be clear, I'm actually quite in favour of the free market and capitalism (moderated to some degree), but this doesn't strike me as either.
Paying execs huge bonuses (whether in cash, gold, shares or whatever), while taking huge sums in state aid and laying off thousands of employees is morally despicable behaviour at best.
It does matter what they got paid in. If they got paid in anything other than shares, I would agree. But the point of shares is that it aligns the economic incentives for the executives and the company. Shares are directly dependent on the economic success of the company. And the ability to employ people and pay them salaries is also directly dependent on the economic success of the company.
If they sell shares and pay employees, then they're not helping the long-term sustainability of the company and its ability to continue hiring people and paying them.
It matters what they got paid in. If they got paid in anything other than shares, I would agree. But the point of shares is that it aligns the economic incentives for the executives and the company. Shares are directly dependent on the economic success of the company. And the ability to employ people and pay them salaries is also directly dependent on the economic success of the company.
If they sell shares and pay employees, then they're not helping the long-term sustainability of the company and its ability to continue hiring people and paying them.
"Bloc Québécois MP Xavier Barsalou-Duval put forward the motion, which states “that this House condemn the decision of senior management of Air Canada to pay themselves $20 million in executive bonuses when they’re received $6 billion in public assistance.”
Air Canada informed shareholders on Monday that its top executives and managers were getting a combined $10 million in stock options and bonuses for their response to the COVID-19 pandemic."
https://globalnews.ca/news/7918875/air-canada-executive-bonu...