Wizz Air pay plan for high executives suffers turbulence

Wizz Air faces another shareholder revolt over boardroom pay as it plans to give top managers millions of pounds of free shares just for staying with the low-cost carrier.

Investors rebelled last year against an extension to a scheme to give CEO Jozsef Varadi a bonus of up to £100million if Wizz Air’s volatile share price soared.

The latest plan, which the company’s own pay committee chairman admits is ‘unusual’, applies to around 15 senior managers, but not Varadi. It comes with no performance strings attached.

Pay spat: Wizz Air faces another shareholder revolt over boardroom pay

All the executives have to do to hit the jackpot and share in around £15million is to stay with the company until 2028.

It means Wizz Air – recently named the UK’s worst airline for delays for the third year running – is on course for another clash with shareholders at its annual meeting later this summer.

Like other carriers, its shares slumped during the pandemic when planes were grounded, but they have recovered as passengers returned to flying.

Tim Bush at shareholder consultancy Pirc said bonus schemes like the one proposed by Wizz Air were ‘flawed’ because in this case it rewarded bosses when the share price bounced back after a fall – not for exceptional performance.

‘It makes as much sense to reward the chief executive for a rollercoaster (share price) ride as it would giving a pilot a bonus for doing the same thing in the air,’ he said. ‘This is just an egregious example,’ Bush added.

A quarter of Wizz Air’s shareholders voted against Varadi’s package after he was given an extra two years to hit targets.

The revolt put the company on the official ‘list of shame’ register run by trade body the Investment Association, which lists firms where more than a fifth of shareholders voted against executive pay. In response, Wizz Air vowed to ‘continue to consult’ with major shareholders about its pay policy but experts say the airline appears to have doubled down instead.

Details of the new scheme are contained in Wizz Air’s latest annual report.

Barry Eccleston, chair of the carrier’s pay committee, said the ‘one-off’ award, ‘while unusual’, was ‘appropriate’ given the ‘challenges’ Wizz Air faces.

It has been hit hard by the war in Ukraine, where it was the biggest operator, and turmoil in the Middle East. The airline flies more planes into Tel Aviv than any other.

‘Wizz Air has been impacted by an unprecedented level of external challenges in the last 12 months,’ a spokesman said.

‘The carrier, 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 scheme was ‘essential’ to attract and retain management talent so that they were ‘rewarded and incentivised for their positive contribution to Wizz Air’s future success’, he added.