- The latest pay plan applies to 15 Wizz Air managers
Wizz Air is facing a new shareholder revolt over boardroom pay as it plans to give top executives millions of pounds of free shares just for staying with the budget airline.
Investors rebelled last year against an extension of a plan to give CEO Jozsef Varadi a bonus of up to £100 million if Wizz Air’s volatile share price soared.
The latest plan, which the chairman of the company’s own pay committee admits is ‘unusual’, applies to around 15 senior managers, but not to Varadi. There are no performance obligations involved.
Pay row: Wizz Air faces another shareholder revolt over boardroom pay
All the executives have to do to win the jackpot and share in around £15 million is to stay with the company until 2028.
It means Wizz Air – recently named Britain’s worst airline for the third year in a row for delays – is on course for another clash with shareholders at its annual meeting later this summer.
Like other airlines, shares fell during the pandemic when planes were grounded, but have recovered as passengers started flying again.
Tim Bush of shareholder advisory firm Pirc said bonus schemes like Wizz Air’s were “flawed” because in this case they rewarded bosses when the share price bounced back after a fall – and not for exceptional performance.
“It makes as much sense to reward the CEO for a ride on the (stock price) rollercoaster as it does to give a bonus to a pilot for doing the same thing in the air,” he said. “This is just a blatant example,” Bush added.
A quarter of Wizz Air shareholders voted against Varadi’s package after he was given an extra two years to achieve his targets.
The uprising put the company on trade body the Investment Association’s official ‘list of shame’ register, which lists companies where more than a fifth of shareholders voted against executive pay. In response, Wizz Air promised to ‘continue to consult’ with major shareholders on its remuneration policy, but experts say the airline appears to have doubled down instead.
Details of the new scheme are included in Wizz Air’s latest annual report.
Barry Eccleston, chairman of the airline’s remuneration committee, said the “one-off” award, while “unusual”, was “appropriate” given the “challenges” Wizz Air faces.
The country has been hit hard by the war in Ukraine, where it was the largest player, and by the unrest in the Middle East. The airline flies more planes to Tel Aviv than any other airline.
“Wizz Air has been hit by an unprecedented level of external challenges over the past 12 months,” a spokesperson said.
‘The airline, which recently returned to profit, had to ground a fifth of its fleet after US manufacturer Pratt & Whitney recalled some of its engines.’
The new plan was “essential” to attract and retain management talent so that they were “rewarded and incentivized for their positive contribution to the future success of Wizz Air”, he added.