Regional Express airline prepares $12 million in executive bonus shares after COVID-19 bailout

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.

However, Labor has called on the airline to continue investing in its regional services and workers rather than giving 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.

In other news

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.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: