Some of the bonuses paid to Thomas Cook’s key executives could be clawed back, a government committee has heard.
However, the final decision will rest with the liquidator, and must meet four key criteria, the government’s business, energy and industrial strategy committee was told on Tuesday morning (15 October).
The committee heard £20 million in board bonuses were paid out in Cook’s final five years, some of which were paid in shares and were lost.
Chief executive Peter Fankhauser told the committee he was paid £4 million of his bonuses in shares, and said it was testament to his commitment to saving the company that they were lost when Cook collapsed.
“I’m deeply sorry about this failure,” said Frankhauser, addressing his comments to Cook’s staff and customers. “I’m sorry I was not able to turn this around this company at pace.”
Fankhauser said he was fully aware of the challenges facing Cook when he took over as chief executive in 2014, but admitted his efforts were ultimately constrained by Cook’s “huge debt”.
He said it was difficult to find a balance between pace of change and the money required to transform such a big business, adding: “We were overtaken by external events that made it difficult to repay these debts”.
Fankhauser said he would not seek to defend his base pay, but stressed he worked “extremely hard” to save Cook, sacrificing £4 million in shares when the company eventually collapsed.
“My commitment to the company was shown [in] that I didn’t sell one share,” said Fankhauser. “I believed in the company and its success.”
The committee heard claw-back procedures would allow the liquidator, if it deems it right, to recover Fankhauser’s 2017 bonus of £750,000, 30% of which was paid in shares now void. No bonuses were paid in 2018 or 2019, Fankhauser said.
Fankhauser appeared before the committee alongside former Cook chairman Frank Meysman, chief financial officer Sten Daugaard, chair of Cook’s audit committee Martine Verluyten and chair of its remuneration committee Warren Tucker.
Tucker confirmed there were four criteria that would need to be met to satisfy bonuses being clawed back by the liquidator, namely presentation of relevant accounts, reputational damage to the company, evidence of gross misconduct and ultimately financial failure.
Committee chair Rachel Reeves said the requirements were “absolutely” met by Cook’s collapse.
Reeves pressed Fankhauser on his remuneration, challenging him on whether he felt it should be clawed back and put to better purpose such as paying redundancy, or paying back taxpayers who will ultimately be hit by the Cook repatriation and refund process.
Fankhauser said he accepted there was a question to be asked and the sentiment of the public, but once again stressed he “worked tirelessly” for a deal and was “deeply sorry” he didn’t succeed. Reeves said Fankhauser’s stance “rang hollow”.