MONTREAL – Senior executives at Transat A.T. missed out on cash bonuses and saw their wages frozen in 2012 as the vacation tour company continued to lose money.
The top five officials, including CEO Jean-Marc Eustache, didn’t receive any short-term incentives for a second consecutive year. The incentives included a special bonus established to offset salary freezes and cost of living increases, according to a proxy filing with the securities regulator ahead of the company’s annual meeting March 14.
The special bonus representing four per cent of the base salary was payable if semi-annual financial objectives were met. They weren’t last winter so no money was paid. The objectives were achieved in the summer period but the executives waived the bonuses.
Transat’s (TSX:TRZ.B) executives did benefit from substantially higher option-based awards during the year, although whether those will be paid out depends on the company’s future financial performance.
Wages were frozen in 2012 for all executives and will be again this year except for chief financial officer Denis Petrin, whose salary could increase because of a market comparison done in 2010.
Despite the freeze, Eustache’s potential total compensation increased nearly 12 per cent to $2.08 million, largely as a result of a 32 per cent boost in the value of such option-based awards to nearly $652,000.
His base salary also increased slightly despite the wage freeze to $822,000 because the company’s fiscal year includes two months in 2011. He also received $246,600 in share-based awards, $293,852 in the value of this retirement plan and $65,760 in other compensation.
With nearly 34 years of service, Eustache’s pension plan is worth $11.3 million as of Oct. 31, providing him with nearly $900,000 in annual benefits.
Transat Canada president Allen Graham’s total compensation was $943,521, up from $700,076 in 2011, a figure that included $400,000 from salary.
The other named executives are Daniel Godbout, senior vice-president transport and revenue management, and Andre de Montigny, president of Transat International.
Petrin, Graham and de Montigny saw their salaries grow by five to 13 per cent in part because of changes in their responsibilities or market benchmarking, said spokeswoman Debbie Cabana.
Petrin’s salary increased 13 per cent to $320,000 representing half his total compensation. De Montigny’s salary grew nine per cent to $295,000 which boosted his total compensation to $557,862.
Transat has been attempting to cut costs as it tries to restore profitability in the face of intense competition for packaged holidays to sun destinations and Europe.
Meanwhile, the union representing maintenance workers has begun voting on a cost-reduction proposal reached following discussions with Air Transat that will allow Transat to operate narrowbody planes in house instead of continuing to subcontract them to Canjet.
The International Association of Machinists and Aerospace Workers couldn’t be immediately reached for comment but it was scheduled to hold votes Friday in Toronto, followed by sessions Tuesday in Montreal. Voting in Vancouver, Calgary and Edmonton was to be determined.
The head of the union representing 1,800 flight attendants said he sees no roadblocks to reaching agreement on changes that could, in the long-term, increase employment.
“I’m quite confident that actually we will reach some form of agreement but right now they kind of left it to all parties to look and examine it and come back to the company and say what we would be willing to propose to the membership,” Peter Buzzell, president of the Air Transat component of the Canadian Union of Public Employees, said from Ottawa.
The Canjet contract, which started in 2009, ends in April 2014. It follows an earlier deal in 2003 with WestJet Airlines (TSX:WJA).
The airline’s goal is to cut $20 million in annual operating cost as part of its parent company’s efforts to restore profitability.
Some of the savings will come from concessions by employees, who last year accepted a two-year wage freeze. But this time, the company isn’t seeking to touch salaries. Among the changes is a switch of hotels close to airports instead of pricier digs downtown.
The $20 million in overall cost savings will help Transat realize its goal of improving its pre-tax operating profit (EBITDA) by $50 million over three years through a series of cost reductions and moves to boost sales.
According the Transat’s regulatory filing, its largest shareholder is Letko Brosseau, an independent investment management firm founded in 1987, which owns 5.5 million shares or 14.76 per cent all of the company’s outstanding B stock.
It is followed by the Quebec Federation of Labour’s Solidarity Fund, with 4.9 million shares.
Connor, Clark & Lunn Investment Management Ltd., held 38.1 per cent of all class A variable voting shares, followed by Norges Bank, which held 31.55 per cent of A shares.
On the Toronto Stock Exchange, Transat’s shares closed down 18 cents, or 2.7 per cent, to $6.42 in trading Friday.