Description: This past week Air Canada announced that it is raised retierment compensation for its CEO, Calin Rovinescu. The amount of his pension at $791,300 will be close to double its previous amount and is conditional on remaining with the airline for another three years. Unifor, the union that represents the Air Canada customer service agents, was apparently displeased with the move, noting that its members “gave up a ton” in order to help Air Canada during various restructurings.
Date: April 21, 2015
1) How would Air Canada have to account for these benefits for its CEO?
2) Based on your knowledge of accounting theory, how do the benefits for Calin Rovinescu fit in with the principles of executive compensation?
3) How would you recommend a business deal with the sometimes negative publicity that comes from executive compensation announcements?