The Regional Express airline has set aside company shares worth more than $12 million to pay bonuses to its executives less than a year after the company was rescued with $62 million in taxpayer aid.
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Former National Party MP and Regional Express (REX) deputy chairman John Sharp stands to gain the most from the bonus scheme, having been granted the potential to receive 1.6 million shares currently worth more than $1.9 million.
Riverina MP Michael McCormack, who oversaw the federal government's aid to REX, said allocating shares to executives was a matter for the company.
Labor has called on REX to continue investing in its regional services and workers rather than give bonuses to already well-paid executives.
REX informed the ASX on June 30 that it would issue 10 million "awards securities" to 11 executives that could be exchanged one-to-one for shares if they met performance criteria such as boosting pre-tax profits.
In response to questions about the bonuses, REX said it was required to establish a "management incentive scheme" as part of a $150 million funding deal with Hong Kong-based investment group PAG.
"They are performance rights only and shares are not issued unless very high performance targets are reached," REX's statement said.
The airline said any linking of the bonus scheme to the bailout "reveals a poor economic understanding of accounting and finance".
"Shares are non-cash in nature and are funded by shareholders and so has nothing to do with the government assistance," REX's statement said.
While the bonuses could be funded by new or current investors buying shares in REX, the airline's prior statements said the business would have been "irreversibly destroyed" without government funding.
Mr McCormack said on Wednesday that REX's decision on allocating awards securities was a matter for the company.
"REX was operating 35 routes that were not being serviced by any other airlines which received funding, so 35 communities would have been left without support, without a service, without the ability to ship in essential personal protective equipment and other vital supplies," he said.
Labor's shadow transport spokeswoman Catherine King said if REX was in such a strong position, it should continue investing in its business and workers rather than pay bonuses to executives.
"Last year REX received $53 million in untied grants from the Morrison Government. Such significant taxpayer support brings with it a responsibility to use it to support jobs and maintain flight routes," she said.
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