From yesterday's The Times
Wizz Air faces a shareholder rebellion over its decision to hand its boss a £485,000 bonus even though it missed the profit target required for a payout.
Three corporate governance groups have raised concerns about the bonus before Wizz Air’s annual meeting on July 28, The Times has learnt.
The bonus is likely to cause anger as it is being paid even though the budget airline cut 1,000 staff in April because of coronavirus. It also has made use of the government’s furlough scheme and has tapped the Bank of England’s covid corporate financing facility for £300 million.
Wizz Air was listed on the London Stock Exchange five years ago and is focused on eastern and central Europe. It is based in Budapest and is led by Jozsef Varadi, 54, its co-founder. The Investment Association has issued a “red top” alert — the most serious warning of a breach in corporate governance — through its Ivis governance research service. The other two warnings are from Institutional Shareholder Services and Glass Lewis, which have recommended that investors vote against the pay report at the meeting.
The airline awarded Mr Varadi a €532,714 bonus for the 12 months to the end of March as part of a €2.8 million pay package for the year. It is paying the award despite net profits of €281.1 million, missing the €294 million target in the bonus scheme. The airline had been enjoying a strong year, until it was hit by the Covid-19 pandemic in March.
It said in its annual report that its remuneration committee had concluded that “it would be inappropriate and not in the interests of shareholders to allow the extraordinary events that occurred in the last month of the financial year to determine the outcome” of the scheme.
ISS said: “Targets, once set, should generally not be amended.”
Glass Lewis said that “remuneration committees should be mindful of wider workforce considerations” and it noted the job cuts and the use of the corporate financing facility scheme. The facility’s terms were revised in May — which was too late to apply to Wizz Air — to restrict executive pay at companies that had used it.