What do you think is/are the employee tax planning course present in the case? If you were CEBU AIR, would you make the same decision?
The Cebu Pacific Group is a Filipino airline group headquartered in Manila that operates subsidiary low cost-carriers; Cebu Pacific and Cebgo. The group aims to create the largest budget airline network between Asia and the Philippines. CEBU AIR Inc., The listed operator of budget carrier Cebu Pacific, faced some devastating financial losses on its operations during the pandemic due to the “heavy impact” of the global health crisis.
In the years prior, the company has recorded billions of increasing income before tax, however, 2020 is a different story. In the said year, the company’s total revenues dropped along with the number of passengers it carried and the number of flights it directed. In the early months of 2021, Cebu Air announced that its board of directors had approved the company’s employee long-term incentive plan.
Cebu Air would allocate up to a total of 2% of its issued and outstanding common shares to be granted to “eligible employees.” The purpose of the plan was to create equity interest in the company and foster identification with shareholder interests “toward common goals” by fostering an “ownership culture” in which employees take a “greater interest in the factors driving longterm business success.”
Question
What do you think is/are the employee tax planning course present in the case?
If you were CEBU AIR, would you make the same decision?
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