Members of the TSSA union protest over Manny Fontenla-Novoa's pay. Photograph: TSSA
Manny Fontenla-Novoa, the recently departed chief executive of Thomas Cook, probably hasn't faced this much heat since thermometers around the Mediterranean crept above 40 degrees in the summer heatwave of 2003.
He may have left the debt-laden tour operator, but he is still the talk of the town. Latest informed sources suggest its annual report, to be published in January, will detail a final pay package of about £1.8m – £1.1m of which will be Fontenla-Novoa's minimum contractual payoff entitlement. That will take his pay for the last four years and 10 months to £16.7m.
"I am damned outraged about this," said Mick Whitley, Unite union regional co-ordinator, who is leading negotiations over planned cabin crew redundancies. "We are trying to stave off the possibility of up to 500 redundancies [a figure disputed by Thomas Cook] among cabin crew. This chief executive has put the company in this situation."
There is also outrage among members of the Transport Salaried Staffs' Association (TSSA), which represents many Thomas Cook shop workers. Union officials are meeting with management on Tuesday to learn further details of swingeing cuts members will be forced to bear. Early estimates are for 200 shops to go and 1,000 jobs, though that figure may be a conservative estimate.
Interim chief executive Sam Weihagen now admits the UK business is the troublesome division within an otherwise strong group, adding it has been "mismanaged" for some time. Staff in the UK will not like to hear that. In recent years they have lost many colleagues as previous managers, under Fontenla-Novoa's direction, pushed through deep cutbacks after Thomas Cook acquired MyTravel in 2007.
The outcome was misery for many staff. And it now seems as though claims that all those painful measures had successfully restored the UK business to rude health have been quietly withdrawn. Indeed, the entire UK management team have been replaced, along with Fontenla-Novoa.
If his payoff sticks in the craw, the controversy pales next to the resurfacing row over Fontenla-Novoa's 2008 one-off bonus of £5m,bitterly opposed at the time by institutional investors and unions alike. This was supposed to be his reward for shrinking and fusing the Thomas Cook and MyTravel businesses, particularly in the UK where the overlap was strongest.
Thomas Cook's then remuneration committee chairman Michael Beckett couldn't praise Fontenla-Novoa's work highly enough. It had "exceeded all expectations", meaning the boss "warranted payment of the maximum bonus". Don't take Beckett's word for it, he said – an "independent review of synergy benefits" had been undertaken by Ernst & Young. (In fact, Ernst & Young are not that independent, they are Thomas Cook's internal auditors).
Fontenla-Novoa's efforts were bad news for many staff, but cutbacks are required in many industries right now. Did his actions deliver for shareholders? At the time, the claim was that the benefit would eventually be savings of £215m a year. That recurring benefit boast looks a good deal less credible given open admissions that the UK business has been severely mismanaged.
It is also worth reprising the cost to shareholders of Fontenla-Novoa's downsizing and reshaping of the UK business. You have to wade through the notes to Thomas Cook's accounts and get out your reading glasses before you find a line which reads "Property cost, redundancy and other costs incurred in integrating Thomas Cook and MyTravel". Over three years this process cost the company an incredible £255m. Similar costs relating to other "integrations and reorganisations" during the last four years added an additional £208m of one-off charges.
Doubtless, Thomas Cook needed a lot of radical surgery – and will now need more – but did the company have the right surgeon in the first place? No it did not
Source:http://www.guardian.co.uk/business/blog/2011/nov/29/thomas-cook-former-chief-heat-over-pay?newsfeed=true
He may have left the debt-laden tour operator, but he is still the talk of the town. Latest informed sources suggest its annual report, to be published in January, will detail a final pay package of about £1.8m – £1.1m of which will be Fontenla-Novoa's minimum contractual payoff entitlement. That will take his pay for the last four years and 10 months to £16.7m.
"I am damned outraged about this," said Mick Whitley, Unite union regional co-ordinator, who is leading negotiations over planned cabin crew redundancies. "We are trying to stave off the possibility of up to 500 redundancies [a figure disputed by Thomas Cook] among cabin crew. This chief executive has put the company in this situation."
There is also outrage among members of the Transport Salaried Staffs' Association (TSSA), which represents many Thomas Cook shop workers. Union officials are meeting with management on Tuesday to learn further details of swingeing cuts members will be forced to bear. Early estimates are for 200 shops to go and 1,000 jobs, though that figure may be a conservative estimate.
Interim chief executive Sam Weihagen now admits the UK business is the troublesome division within an otherwise strong group, adding it has been "mismanaged" for some time. Staff in the UK will not like to hear that. In recent years they have lost many colleagues as previous managers, under Fontenla-Novoa's direction, pushed through deep cutbacks after Thomas Cook acquired MyTravel in 2007.
The outcome was misery for many staff. And it now seems as though claims that all those painful measures had successfully restored the UK business to rude health have been quietly withdrawn. Indeed, the entire UK management team have been replaced, along with Fontenla-Novoa.
If his payoff sticks in the craw, the controversy pales next to the resurfacing row over Fontenla-Novoa's 2008 one-off bonus of £5m,bitterly opposed at the time by institutional investors and unions alike. This was supposed to be his reward for shrinking and fusing the Thomas Cook and MyTravel businesses, particularly in the UK where the overlap was strongest.
Thomas Cook's then remuneration committee chairman Michael Beckett couldn't praise Fontenla-Novoa's work highly enough. It had "exceeded all expectations", meaning the boss "warranted payment of the maximum bonus". Don't take Beckett's word for it, he said – an "independent review of synergy benefits" had been undertaken by Ernst & Young. (In fact, Ernst & Young are not that independent, they are Thomas Cook's internal auditors).
Fontenla-Novoa's efforts were bad news for many staff, but cutbacks are required in many industries right now. Did his actions deliver for shareholders? At the time, the claim was that the benefit would eventually be savings of £215m a year. That recurring benefit boast looks a good deal less credible given open admissions that the UK business has been severely mismanaged.
It is also worth reprising the cost to shareholders of Fontenla-Novoa's downsizing and reshaping of the UK business. You have to wade through the notes to Thomas Cook's accounts and get out your reading glasses before you find a line which reads "Property cost, redundancy and other costs incurred in integrating Thomas Cook and MyTravel". Over three years this process cost the company an incredible £255m. Similar costs relating to other "integrations and reorganisations" during the last four years added an additional £208m of one-off charges.
Doubtless, Thomas Cook needed a lot of radical surgery – and will now need more – but did the company have the right surgeon in the first place? No it did not
Source:http://www.guardian.co.uk/business/blog/2011/nov/29/thomas-cook-former-chief-heat-over-pay?newsfeed=true
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