The outrage of the month: Mr Brito’s EUR 133 million super bonus
As could be expected, many on the bloggosphere screamed "à la lanterne" when an article appeared in the Belgian magazine Trends on 9 March 2012 which said that AB-InBev’s CEO Carlos Brito was entitled to a super bonus of EUR 133 million. What had Mr Brito done to earn this? Bring down debt two years ahead of target that had been piled up following the acquisition of Anheuser-Busch.
Now, that’s hardly news. Brauwelt readers have known for years that executive options totalling about EUR 1 billion were given to CEO Carlos Brito and 39 AB-InBev executives provided they would cut debt to a set target.
What makes this scheme unusual is that the bonus was tied to a single criterion, a debt reduction target, and not to a host of criteria. But remember, the bonus was awarded at a time when the world was facing a severe financial crisis. And special circumstances require special measures.
AB-InBev’s group net debt/EBITDA stood at 5.5 times when the Anheuser-Busch deal was completed in November 2008. The 2008 exceptional option grant was set to vest if the group’s net debt/EBITDA ratio fell below 2.5 times before the end of 2013. The actual debt ratio fell to 2.26 times by the end of 2011. Ergo Mr Brito’s super bonus.
Within days of the article appearing in Trends, Belgian protesters went into the street, under banners saying the AB-InBev boss was “drunk on his bonus.” Belgian politicians too voiced their criticism.
The interesting thing about the whole affair is that Mr Brito’s extra bonus has been used by the media as a pretext for a bit of "Old Europe"-bashing. Or why is it, they wonder, that European CEOs still earn much less than their U.S. peers? Thomson Reuters ASSET4 data show median pay for companies’ highest earners, usually the CEO, was USD 2.5 million in Europe in 2010, against USD 9.8 million in the US and Canada.
Could it be that over in the U.S. people are respected who make lots of money whereas in Europe they elicit an "envy debate" about the widening income gap between bosses and low level workers?
No wonder, politicians out to grab the populist vote have had their say on this matter, too.
According to Reuters, the Conservative British Prime Minister David Cameron has described the rising gap between pay at the top and bottom as “concerning,” and his government is planning measures to make it easier for investors to block payouts.
Likewise, the French President Nicolas Sarkozy and his Socialist Party challenger in upcoming elections, Francois Hollande, have both proposed measures to curb executive payouts.
Be it as it may, the debate over bountiful bonuses has made most people ignore the fact that some of Mr Brito’s options will only vest on 1 January 2014 and the rest on the same date in 2019.
Time still to work up more of a popular disdain.
