KLM ditches 'excessive' bonuses for chiefs after uproar

Published on Tuesday 20 April 2004 01:00

KLM, the Dutch airline poised to merge with Air France, has dropped plans to pay its top executives bonuses based on post-merger savings.

A spokesman for the company said KLM’s board had decided not to pay the bonuses, which had been widely denounced by unions and described as "excessive" by Dutch finance minister Gerrit Zalm. KLM spokesman Bart Koster said the board has decided to "withdraw from the synergy bonuses", but he would not say what had sparked the turnaround.

Under the bonus scheme, top KLM managers would have received as much as 50 per cent of their annual salaries in the years after merging with Air France to create the world’s top carrier by revenue. But unions were concerned the bonuses would give managers an incentive to make job cuts on top of the 4500 redundancies KLM has already announced.

Dutch trade unions, which had threatened to stop wage talks and even to consider lightning strikes if the bonus plan was not dropped, had asked the country’s finance minister to intervene in the dispute. Mr Zalm, who said the bonuses were too generous, had intended to send a representative to raise his concerns at a KLM shareholders meeting, which had been called to discuss the takeover deal.

The Dutch government holds a 14 per cent stake in KLM, which is scheduled to complete its merger with Air France next month.