Possible KLM CEO bonus “unwise”, indefensible: Finance Minister

Minister of Finance Wopke Hoekstra has voiced his disapproval at the prospect of KLM’s top boss, Pieter Elbers, receiving a pay increase this year, calling the possibility “unwise”. This comes after a meeting agenda for KLM stakeholders, which indicates the CEO could receive a bonus that would effectively double his 2020 salary, was leaked to the newspaper De Telegraaf on Friday.

Hoekstra told the newspaper Het Parool that, while he had not been aware of KLM’s intention, he nevertheless thinks that it is “extremely important” that, during the coronavirus crisis, companies ensure that the “strongest shoulders bear the heaviest burdens” in a manner that is “reasonable and is defensible to the taxpayer.”

This comes as KLM’s parent company, the aviation giant Air France-KLM Group, stands in the midst of discussions with the Dutch and French governments concerning a multibillion-euro support package that would prop up the company as it suffers from plummeting demand due to the Covid-19 crisis.

Elbers, who has headed up KLM since 2014, is expecting to see his variable pay increase from 75 percent to 100 percent of his base salary, which currently stands at 520,000 euros according to De Telegraaf. Variable pay refers to the amount of extra money that is remunerated to reward good performance. This figure is typically decided by shareholders.

KLM shareholders are likely to meet in the near future to agree a new bonus limit for the airline’s management, which is expected to be raised, according to several published reports.

However, according to business and financial news outlet RTLZ, while Elbers and other members of KLM’s management could very possibly see a jump in their variable pay this year, other bonuses and dividend payments are not in the cards for the top executives.

“Given the situation surrounding corona and the impact on KLM,” said Gerrie Brandt, spokesperson for KLM, “it is clear that there will be no bonus for the fiscal year 2020.”

“It has also been decided not to increase the fixed salaries for the board of directors for 2020,” Brandt added.