A retirement of 21 million for a co-founder of Transat

After bowing out at the head of Transat AT last year while the tour operator was still shaken by the pandemic, Jean-Marc Eustache pocketed his pension plan all at once, which earned him a check for 21 million.

Julien Arsenault
The Press

The details surrounding this important payment made to one of the co-founders of the parent company of Air Transat appear in the proxy statement sent to shareholders in view of the annual meeting scheduled for April 27, which will be held virtually.

“No severance pay was paid to him, but [M. Eustache] immediately received the value of the pension benefits accrued for his 42 years of service to the company, of which he was a founder”, explains one, in the document of approximately 135 pages.

The circular also says that the tour operator’s management, which underwent several changes over the past year, has seen its total compensation – which takes into account salary and other benefits such as bonuses and pensions – settle at around 11 ,4 million.

After receiving financial support from Ottawa, the tour operator, which is seeking a new government loan to replenish its coffers, had seen its architect of the past four decades hand over control of the company to Annick Guérard on May 26.

At 1^er November 2020, the value of the pension plan of Mr. Eustache, aged 73 at the time of his departure, was 18.5 million. Since he remained in office a little longer than expected, the manager benefited from a positive actuarial review of 2.6 million.

“The lump sum paid to our founder and long-time CEO belongs to him and does not belong to the company,” said Transat AT Chairman of the Board, Raymond Bachand, in a statement sent to The Press in response to a question as to why Mr. Eustache had requested a single payment.

The co-founder of the tour operator also owns 430,000 shares of the company, according to financial data firm Refinitiv.

The reserve was ready

According to the tour operator, the payment made to Mr. Eustache has “no impact” on the company’s cash flow, which continues to melt as the company loses money. The amount in question had already been pledged.

As of January 31, the tour operator’s cash, which draws around 30 million per month from its reserves to consolidate its recovery, totaled 341 million.

“The exceptional nature of the amount takes into account Mr. Eustache’s longevity as president,” says François Dauphin, director of the Institute for Governance of Private and Public Organizations (IGOPP).

Overall, the overall pay of senior executives at Transat AT meets the conditions imposed by the Trudeau government last year before making nearly $750 million available to it.

Cash bonuses remained pending, as did stock and option awards. President and CEO Annick Guérard was entitled to a total compensation of 1.3 million, which takes into account a base salary of $540,132. The value of his pension plan nearly tripled ($600,000) to reflect his new duties.

Excluding the sum of 3.6 million representing the value of the employers’ pension plans, the compensation of Transat AT’s senior management totals 7.7 million. This sum takes into account an amount of 2.6 million paid in severance pay to two executives who left the company in 2021.

Mr. Eustache was also entitled to a sum of 1.3 million for “unused accumulated vacation” and a salary of $500,000 last year for his work from January to May.

On the Toronto Stock Exchange, Transat AT shares closed Friday at $5.11. Since the beginning of the year, the stock has posted an increase of 18.8%, or 81 cents.