The dismal state of Air Canada

[xarir]

I find it amusing that someone would have a problem with Buzz Hargrove flying first class when business executives do it all the time. Buzz is the head of one of the most powerful Canadian unions and you chide him for flying first class? Gimme a break. Actually, give him a break.

Like galt, my company has rules too. Any flight over 6h can be in business class; everything else is back of the bus. If Buzz consistently flys up front, I'd have a problem with that. He's supposed to be showing restraint and setting an example for the union he leads. I have no problem with his salary - that's fair. He represents the interests of thousands of people after all. But his day-to-day conduct should be an example of fiscal restraint.

The only way I could condone his business class 1h flight would be if he was booking last second as a result of the talks he was engaged in. Otherwise all his flights should be booked in advance at lowest possible fare.

 

[xarir]

I don't have a problem with high CEO salaries; it's just when executives sink the ship to attain short-term bonuses that sticks in my craw...

Agreed. That's why I think CEOs should make a salary commensurate with whatever industry they're in ($500K to $1 million let's say) and have everything else in bonus. But that bonus is only payable if the company is doing well in both absolute terms and relative to the rest of the industry.

Even then, a bonus for relative performance can only be a short-term thing. For example, if a company loses $10 million but the average loss in the industry if $100 million, I'd say the CEO did a pretty good job and should get a bonus of some sort. But if the company keeps losing $10 million per year for 3 years in a row, even if the industry as a whole is tanking, I'd say the CEO hasn't taken enough direct action to diversify the corporation into more profitable areas. Therefore CEO bonus should decline or not be paid at all.

 

[Keebler Elf]

Problem is CEOs are highly sought after commodities and any upper-tier company that tries to implement such a compensation package quickly finds out no one is interested. End result? The company suffers and is forced to either adjust its package or settle for a less desirable candidate.

I relate this to sports players. If you can get it, you deserve it. What armchair observers think is irrelevant.

 

[onthebottom]

Agreed. That's why I think CEOs should make a salary commensurate with whatever industry they're in ($500K to $1 million let's say) and have everything else in bonus. But that bonus is only payable if the company is doing well in both absolute terms and relative to the rest of the industry.

Even then, a bonus for relative performance can only be a short-term thing. For example, if a company loses $10 million but the average loss in the industry if $100 million, I'd say the CEO did a pretty good job and should get a bonus of some sort. But if the company keeps losing $10 million per year for 3 years in a row, even if the industry as a whole is tanking, I'd say the CEO hasn't taken enough direct action to diversify the corporation into more profitable areas. Therefore CEO bonus should decline or not be paid at all.

Surprisingly consistent with S&P 500 median Pay (from the Economist (of course)):

Salary - just under a Million
Annual Bonus - just under a Million
LTIP - just over a Million (Long Term Incentive Pay - realized)
Option Value Realized - about 2.5 Million
Realized Stock - about 1.5 Million


OTB

 

[Keebler Elf]

Also, comparing Buzz Hargrove to an executive isn't really an accurate comparison. If you're going to compare him, compare him to the highest ranking executive in a firm who is synonymous with the industry in which he works.

To compare joe-blow executive to Buzz is, sorry to say it, being a little overly gracious to said executive (unless it's Bill Gates or Michael Eisner or someone of that status within an organization).