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Capital A owes investors explanation why founders receive fat pay cheques

Publish date: Fri, 13 May 2022, 02:51 PM

FIRST and foremost, Capital A Bhd (formerly AirAsia Group Bhd) must be commended for churning out a very in-depth Annual Report 2021 – which stretches 333 pages – that singles out every detail of its business from operations to business expansion to financials to corporate governance statement, among others.

But amid the furore over recent spate of flight delays during the recent Hari Raya festivity – not to mention failure by its sister airline, AirAsia X Bhd, to refund potential passengers for flight cancellations – investors are left wondering what is the rationale for the budget airline operator ‘to reward’ co-founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun with pay cheques amounting close to RM30 mil during its FY2021.

According to Capital A’s Annual Report 2021 which can be accessed on Bursa Malaysia’s website, Fernandes who is the Capital A CEO took home RM14,947,213.00 (excluding RM124,781 in meeting, travelling and other allowances) while executive chairman Kamaruddin was paid RM14,051,429.

Capital A owes investors explanation why founders receive fat pay cheques


Not only that this marked a sharp increase from the RM4.8 mil they had received in FY2020, both gentlemen received fat pay cheques at a time when the aviation group incurred a net loss of RM3.72 bil for its financial year ended Dec 31, 2021 (although this is lower than a net loss of RM5.89 bil in FY2020).

Notwithstanding two consecutive years of bleeding, Capital A’s current liabilities had exceeded its current assets by RM6.75 bil (2020: RM5.9 bil) as of Dec 31, 2021. Additionally, the group also reported a shareholders’ deficit of RM3.38 bil (2020: RM1.21 bil).

The generous remuneration package bagged by both Fernandes and Kamarudin – albeit by very much lesser margin – brought to mind the brouhaha regarding Sapura Energy Bhd’s president and CEO Tan Sri Shahril Shamsuddin’s above RM80 mil annual salary between FY2014 and FY2017.

Shahril’s remuneration package, however, shrank slightly to RM71.92 mil in FY2018 when the integrated global oil & gas (O&G) outfit slipped into the red with a net loss of RM2.5 billion, dragged down by a massive RM2.13 bil impairment provision.

Back then, Shahril had justified that part of his fat salary hinged on a share covenant that he has with financial institutions when Sapura Energy re-financed its whopping RM14 bil in borrowings.

In all honesty, nobody is envious of Fernandes and Kamarudin’s ultra-high net worth status except that they both raked in such a bountiful harvest at a time when the group had to significantly reduce its cash burn rate through various cost containment and optimisation exercises. That included:

  • Right sizing of manpower and salary cuts for management, staff and directors;
  • Re-skilling, up-skilling and moving operational manpower across functions within the group’s ecosystem of online travel and lifestyle business during the downturn in travel; and
  • Negotiation of deferrals with vendors, service providers, suppliers and other business partners.

In April 12, 2020 which was at the height of the COVID-19 pandemic, The Star reported that both AirAsia founders would give up their salaries while employees had agreed to take up to 75% pay cut as the budget airline group grappled to manage the impact of the health crisis.

At the close of today’s mid-day trading, Capital A was down 0.5 sen or 0.71% to 69.5 sen with 7.87 million shared traded, thus valuing the company at RM2.89 bil. – May 13, 2022

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