Haji-Ioannou's staff, whom he encourages to call him Stelios, is now seeing the other side of their boss' in-your-face attitude.
EasyEverything has run out of money. Last year, the company raised cash from Munich, Germany-based venture capital firm Apax Partners and U.S. computer maker Hewlett-Packard through convertible bonds. Neither has chosen to turn the bonds into shares, preferring to take out the cash. Having failed to find others' money to replace it, Haji-Ioannou is putting up £15 million ($22 million) of his own.
Under the latest proposed refinancing, which on Sept. 28 goes to EasyEverything shareholders for approval (Haji-Ioannou owns 75% of the shares, so it is likely to be a rubberstamp affair), he will increase his holding in the company to 95% through the issue of 1.5 billion new shares to himself priced at
one penny each.
His staff also get one-penny shares as part of the package. What has upset many of them is that the shares were previously valued at
£1. Whatever visions EasyEverything staff had dancing in their heads of the easy life from a dot-com windfall have disappeared at a stroke.
When EasyEverything was founded in 1999, it did what many Internet start-ups did, add stock sweeteners to the remuneration package. Staff were offered two £1 shares for every £1 they invested in the company, which was being lined up for an initial public offering on the London market in the middle of this year, now delayed until next year. The maximum investment was capped at £10,000. The company also offered a loyalty bonus equal to one year's salary in shares for 15 senior staff if they stayed for 12 months.
Staff members now hold about 5% of the shares, with the average initial investment worth an average of £5,000, according to Haji-Ioannou. After the refinancing, the value of that average shareholding will fall to £50
. The value of senior staff bonus, previously in the
£80,000 to £150,000 range, will be just £800 to £1,500.
On Sept. 25, two senior staff, including Chief Executive Maurice Kelly, quit. Haji-Ioannou is taking over the reins himself.
"That's capitalism," he told a London newspaper. "[The staff] still have the shares. They are just a lot less valuable. This is an Internet company. We used to think they were valuable. Now they are not."
EasyEverything's staff must be hoping that Haji-Ioannou doesn't try to give another practical course in his business philosophies. He himself doesn't skim royalties or expenses or even salaries from his companies. His strategy for getting richer is more like that of Bill Gates: Go public and look for some long-term appreciation.
At least it works for the boss. EasyJet now has a market capitalization of $958 million while Stelmar Shipping, his $66 million (annual sales) family oil-tanker business, which went public in New York earlier this year, has a market value of $162 million. Easy Street isn't so near for EasyEverything staff.