LONDON – Shareholders at Wizz Air are set to vote on whether CEO Jozsef Varadi will get a £100m bonus, with this being branded “excessive”.
The vote is to take place tomorrow in Geneva, with Varadi potentially receiving this bonus on the grounds of raising the share price to £120 over a five-year period.
Following a huge loss of £559 million, the share price at the carrier has been reduced to £20.71, with shares falling around 50% because of this.
Wizz Air as a brand has been accused of not taking into account complaints from shareholders over the excessive pay of CEOs and fat cats.
A spokesperson at the low-cost carrier said the following on the bonus plan that is to be voted on:
“We have continued to consult with investors on the plan and continue to believe that it is appropriate that exceptional performance should be strongly rewarded.”
Investor consultancy firm PIRC has said that the pay that Varadi would be set to receive is “excessive” due to the fact that it doesn’t align with the needs of the shareholders.
CEO Pay Becoming Major Problem in the Industry…
Wizz Air isn’t the only carrier that is going through controversy over the pay packets of CEOs.
Earlier last week, it was revealed that Qantas CEO Alan Joyce received a $287,000 pay rise despite all of the problems that the airline is going through.
This effectively takes Joyce’s salary to over $5.5m per annum.
The Qantas annual report has revealed the pay increase for the beleaguered airline’s Chief Executive Officer, effectively taking his salary package from $5,288,000 in 2021 to $5,575,000 for 2022.
The announcement is unlikely to be received positively by the flying public, especially after the litany of flight cancellations, lost baggage incidents, and serious internal problems which have dogged the Australian carrier this year.
Tuesday Will Be An Important Stepping Stone for Varadi…
It’s clear that Tuesday will be an important stepping stone for Varadi as he will no doubt have to lobby shareholders to vote in favor of the bonus pay.
Even so, the fact that £100m could be available to him in bonuses, it’s clear that shareholders won’t take kindly to this proposal, especially if they are not receiving returns of that volume.
But because of the losses that Wizz Air has experienced, it does make the likelihood of Varadi achieving his goal unlikely at the moment, but there is still time, of course.
If the shareholders vote in favor of this bonus package, then this could set a dangerous precedent for other CEOs to do the same, and turn the bonus pay package into something similar to the football transfer market.
Overall…
With all of the controversy that has emerged with Varadi over the course of this year, featuring the pilot fatigue scandal and more, it’s going to be interesting to see how this vote goes.
If they do vote in favor of the package, then all eyes will be on Varadi to achieve this target of increasing the share price to £120. Dependent on the performance of the carrier during Summer 2022, this may hike the price in the right direction.
But for now, all we can do is sit back and wait to see what happens tomorrow.
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