Booking.com gives €28m in bonuses to three top execs; Took €65m in State aid
Directly via bailouts and indirectly via inflation, COVID was the biggest wealth transfer to the rich in history.
The title is almost underwhelming in severity (which is a refreshing break from sensationalistic headlines),
“[€28m in bonuses] even after taking three billion euros in loans last year, and 100 million euros in State aid including 65 million from the Netherlands. The company also let go of thousands of people during the coronavirus pandemic.”
Booking.com isn't alone engaging in these practices. Many corporations seem to defend these payouts, by suggesting that these executives have gracefully managed the organisation during the pandemic distress. Such statements aren't very reassuring, because they feel more like sound bites of opinion, rather than arguments that can be debated and examined.
How many jobs could they have saved with 28 million euros?
Covid has got me thinking about the government’s role in social welfare.
Providing social welfare through money allows for people to misallocate the money or skim off the top of the money. For the vast majority of people their covid stimulation money did not go into their pockets, it went to their landlord or their mortgage holder resulting in a massive wealth transfer from public funds to banks and those who own land.
I think the government should directly supply the basic needs of its citizens instead of using money as an intermediary for supplying social welfare. Money is only a means to an end for obtaining the basic necessities to live: you cannot eat a dollar bill for nutrition or sleep under a dollar bill for shelter. Government provided housing and food should be available to any citizen — no questions asked. At that point you can get rid of all welfare programs since the government is directly supplying the basic necessities for those in need.
People would still be incentivized to work in order to obtain luxuries which are not supplied by the government: a private house, travelling, a car, etc.
Stories like this further affirm that handing out money is not a good way for the government to provide welfare.
The real error here is public money being given to private companies.
Let them break
Fund people, not companies
In the article, it's mentioned that they took €100m in state aid — even more egregious than the mere €65m they took from the Netherlands alone. And that, while Booking.com gets discounted tax rates and strong-arms the Dutch government to pay even less through an "innovation box" [0]. Not good at all.
> In 2018 alone, the company received a tax discount of $435 million in the Netherlands, or about €385 million. Thanks to this bait from the state, not only will Booking’s headquarters remain in the Netherlands, but all income generated worldwide by the company will immediately flow to the Netherlands before being taxed elsewhere.
"2.8 million euros went to Peter Millones, the vice president. Nearly 20 million euros, mostly in shares, went to CFO David Goulden"
Goulden & Millones. You could not make this shit up.
I'm surprised anyone is surprised.
Here in the US we've spent several trillion dollars on Covid relief so far, and there's more to come. When you're dealing with a torrent of printed cash of this magnitude, there's of course going to be a lot of it that ends up in the wrong hands for the wrong reasons.
I know at least one French consulting company did the same (Amaris). They basically gave the benefits they made from state aid straight to their shareholders. And at the same time they laid people off.
My guess is: most companies who could do this did. No conspiracy, just plain greed.
It seems that most of that €28M was "mostly" paid out in "shares": iow, minimal cash was transferred. That may make it both better or worse for everyone else at Booking.com (if shares go back in value as travel gets reinstated, it will effectively be more than that), but the aid itself was not used to cover these bonuses. Basically, Booking.com shareholders have redistributed their shares to a couple of employees.
If, otoh, Booking.com goes bust, the value of these bonuses would plummet. If they attempted to cash in, it's likely value would go down too.
Not going into the moral background of this, but the title and comments here were misleading to me.
It's interesting the CFO got more than 3x the CEO, and more than 2x CEO + VP. Does anyone know the reasoning behind that?
It seems a bit shady to me in general for a CFO to be paid large performance bonuses.
My view is that a system of government, where material advantages are based on quality of legal representation -- is doomed to become non-representative.
The case in article is just an example of it.
That means, in short, wealthy (corporations or individuals) can afford good legal representation --therefore they will necessarily bias the case law. And case law, will necessary, bias the subsequent judicial decisions.
So a judicial system biased towards judging in favor of more expensive legal representation, is really the main reason why corporations become larger, why they create their own system of rules, that 'floats' on top of the system of rules for the mere mortal.
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We often have a dialog and an argument about size of government, vs size of corporations, vs individual freedoms and so on.
But really what we first must recognize is that manipulation, disinformation and biases in the judicial systems must be eliminated.
Basically we have to remove information manipulation and judicial selectivity out of the society.
Then argue about other stuff.
A step in the right direction -- would be to assign legal representation to all sides involved in a dispute (or in a criminal case) -- from some sort of a pool (based on say some standardize algorithm).
This way in a dispute between Alphabet and a Joe Shmo would have equal legal representation.
Overtime, this will slowly change case law, and outcomes of legal disputes -- towards fairness.
Some might ask: would you do the same with Financial advisors, Doctors, University professors ?
I would say no, because they do not impact the fairness of judicial system.
Having said that, I do think that Job applications must hide (not include) what University an applicant had attended... but that's discussion for another post...
Stop using marketplaces and book directly, these companies have no risks and take 16% to 30% commissions. If consumers start booking directly, recovery from the pandemic will be much faster.
My company is buying back millions of its own stock, giving 0€ raise to employees.
I stopped using them around two years ago when I was finally fed up with the increasing amount of dark patterns and gaslighting they did on their site. The reviews also became more and more inflated, I stayed at places with a 8.9 rating that were really shabby and subpar. The straw that broke the camel's back was when I booked a room at a hotel that had great reviews and lovely photographs, only to come to a place that was in the middle of being remodeled, with torn down walls and entry through a construction site. Also, most hotels will actually allow you to book rooms at lower prices and with less severe cancellation policies when calling them directly.
When the poor receive benefits, some people get upset if they buy iPhones or big screen TVs.
This is the first time the rich have experienced the same disapproval. I bet they're really surprised.
If we're really going to insist on bailing out private companies (rather than letting them fail and using the money to help those left without work) - then surely these bailouts should come with rules that prevent the money from basically being embezzled by top management?
The article is thin on details.
Does the 65 million Euros of state aid need to be repaid? Or was it free money from the government with no expectation of repayment?
Lately, every time I read something like this, I think: if you build/maintain a system where such behavior is possible or even incentivized, you will get more of the same behavior.
If you want this to change, at the very minimum, crooks in leadership positions need to be socially outcast, given a harsh prison sentence, their wealth confiscated and their legacies dismantled. Essentially, there need to be consequences. They need to lose what they care most about: their status, freedom and wealth.
From there, give them a clean slate to work on earning our trust again, to rehabilitate, the hard way. You know, like every convicted criminal should have the chance to.
If it didn't come with string attached why are people mad at the companies? Shouldn't they either be mad with their representatives who allowed such things?
28M bonuses on after probably worst year in their history? How can the system be this broken?
The base position taken in some countries of not providing bailouts, or bailouts above a certain limit, to companies who carried out stock buybacks or issued dividends was fantastic in my opinion, because it makes situations like this extremely bad for the company.
Of cause a company would want to give huge bonuses to execs who manage to pull in a huge amount of money from the state, that's great for the company. Why should a company care if executives are being rewarded or are being selfish if it also benefits the company and owners overall?
But with the exception to the aid, that would only be possible if the same execs brutally punished the stock owners, which would obviously put them in bad light for being selfish and not just doing good for the company.
Likely bonus criteria were set up in advance, but governments handing companies money certainly didn't hurt. Nor did having the people who run the company choose to award themselves bonuses. But look... end of the day here, if you give money to businesses don't expect the people running those businesses to do anything that isn't selfish with the money.
If you give a bum on the street $5, he's going to spend that money on himself. If you give a CEO $5M, he's going to spend that money on himself too. I don't see why any sane person would expect anything different. Moral of the store is don't give money to people... not bums on the street, or CEOs. Just don't do it. You'll be let down every time.
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It's going to be interesting to see analysis of various "covid response" policies in terms of their intended vs. actual consequence.
I'm guessing that countries that tied corporate money to payroll somehow are going to see better impacts than those that didn't.
There's also a lot of weird incentives and corner cases. Especially in countries where states/provinces/whatever have a lot of autonomy, there is a ton of variation too.
I'm not sure if I just can't find this information or if people exploiting government aid are just silent about it.
These things happen because there are people who are trained to exploit these situations.
But there are definitely levels to it.
One way to do it is to just start a bunch of projects that will fail in countries that cannot meet their EU funds quota.
https://cohesiondata.ec.europa.eu/overview
You look at the data here. Figure out which EU countries can't find enough validly looking projects to get the funds. Go to that country with some initial funding and start legitimate looking business that will be funded by EU (mostly). Create legitimate expenses, even though the business will never be profitable and leech the EU funds through your personal accounts at some non-suspicious rate.
Involving more players makes everything look more legitimate and when things fail, it's just how capitalism works. You can spend decades leeching on the money.
On several occasions I met some fairly competent looking aliens and eventually realized this was the pattern that they wanted to exploit.
These things are also done on a personal level (for example, a psychologist wants to open a practice that will work with groups of children and the project is well-written, costs are well defined and EU gives most of the money and the person just does what they described at a lower cost - spending the money on services that will indirectly make the individual richer).
Another example is non-profits in EU. Small and large, they just suck out so much money, do the things they say will do, but the costs trickle down to the executives through various channels (for example, you can hire individuals to educate your employees but they charge you for fictional stuff and you collect the spent funds through some other way).
They'd better spend this money to refund the customers for missed flight/hotel reservations in 2020/2021.
And yet, people still vote for the same kind of politicians.
I don't blame the execs, I would have done the same.
This needs a trigger warning for the Dutch people reading this site.
Shameless. Totally shameless.
There needs to be done something about situations where companies pay minimum wage and at the same time register millions or billions in profits (and then making artificial loss while moving money offshore).
It's controversial, but I think minimum wage should be directly tied to a given company revenue.
Every crisis is an opportunity IF you have business man's instinct.
This is what we, in popular language, call a scam.
WOW. That's all I have to say.
Well blame the politicians who left loopholes in the laws to be exploited. Or blame yourselves for falling for the same stupid trick over and over.
If everything they did was legal and by the book you shouldn't be blaming them, you should blame the lawmakers that allowed it to happen. There are no excuses when you write and vote on laws for millions of people to abide by.
Just another case of privatizing gains and socializing losses. A tale as old as America itself.
why would anyone want to go to work everyday and pay taxes, when things like this can; and happen?
Same thing is happening here in the US. For example, Trump's law firm Kasowitz Benson Torres took a $10m forgivable government loan for COVID relief [1] despite earning a profit of over $2m per partner in the preceding years [2].
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These "state aids" are coming from the mandatory unemployment insurance scheme that both employees and employers (in this case, Booking) are forced to pay in.
It is silly to now blame companies and employees now making use of the insurance that they paid in for years. Imagine crashing your car and the insurance is refusing to pay you, arguing "but you just bought a second car! you don't really need the insurance money!". You can claim it is morally wrong, ultimately the government set the conditions for these programs.
Also one thing to keep in mind: we don't know the exact conditions of these bonuses, they might be simply legally required to pay out the bonuses.