LOS ANGELES, June 21, 2013 /PRNewswire-USNewswire/ -- FirstGroup PLC (FGP: LN) is under fire for awarding hefty bonus payments to top U.S. executives while workers have been denied fair wage increases and improved working conditions.
An approximately $1 billion stock offering was needed to protect FirstGroup's bond rating from possibly being downgraded to junk bond status on May 22. FirstGroup has seen its value plummet to historic lows and has lost billions in shareholder value. A number of executives have recently fled to competitors.
FirstGroup is the United Kingdom-based multinational parent company to First Transit and First Student, the leading school bus transportation company in the United States.In 2011, the Teamsters Union and First Student signed a national master agreement, covering more than 20,000 workers and improving the company's operations. "This company should be aggressively winning business based on its improved safety and lowered turnover, which were achieved as a result of the national agreement with the Teamsters. Instead, FirstGroup is using its resources to pad executive pockets by paying out six-figure bonuses, rather than invest in smart business strategies," said Rick Middleton, Teamsters International Vice President and Chair of the national bus campaign. "It is unconscionable that FirstGroup workers would have to suffer, while company executives are shamelessly cashing in." Tim O'Toole joined the company in June 2010 as Chief Operating Officer, and in November 2011 became the Chief Executive of FirstGroup. Linda Burtwistle became President of First Student in 2008. Under their leadership, the corporation has lost approximately 80 percent of its value. When O'Toole took the helm at FirstGroup, the stock traded at approximately 400 pence or $6.25, at current exchange rate. When Burtwistle took over at First Student the stock traded at approximately 600 pence or $9.37, at current exchange rate. At close of trade on June 21, 2013 , the stock was valued at 98.50 pence, approximately $1.52. Despite this historic erosion of shareholder value, diminishing bus count and shrinking margins, in May 2013 O'Toole and Burtwistle awarded management bonuses while at the same time their Vice President of Labor Relations, Thomas Secrest, made claims that reasonable and equitable wage increases for FirstGroup's unionized employees could not be granted. O'Toole attended the recent U.S. Open held outside of Philadelphia at one of several exclusive country clubs he belongs to. Burtwistle recently purchased a six-figure dressage horse. FirstGroup Chairman Martin Gilbert announced his resignation in May. At his insistence, O'Toole was kept on as CEO. "With all of the talented executives having departed FirstGroup for its major competitors, it's understandable the corporation finds itself in dire straits, but it is incomprehensible that the current leadership awarded executives bonuses while the hardworking Teamster-represented employees are denied a living wage," Middleton said. "With leadership like this, it's no wonder FirstGroup is closing in on penny stock status."
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