Wizz Air faces high dissent over remuneration
July 30, 2021
Wizz Air Holdings held its AGM on Tuesday and received high dissent on remuneration due to the proposed introduction of a Value Creation Plan. The VCP is a five-year plan that will payout based on share price growth alongside ESG objectives and at maximum payout, the CEO will receive GBP100.8 million.
Other value creation plans, such as those seen at Persimmon and Ocado, have resulted in significant shareholder dissent due to excessive awards and the reliance on share price performance, which can be impacted by various factors outside of the executive’s control. In the case of Wizz Air, the travel industry could see a post-pandemic recovery resulting in windfall gains from the VCP achieved by a shift in the market rather than through the board’s actions.
Wizz Air suffered a remuneration report defeat in 2020 so they are a repeat offender and have not responded appropriately. The key issue last year was the annual bonus award granted to the CEO and the use of discretion by the remuneration committee to amend the profit target/outcome and the wider stakeholder experience – the company utilised government support and also fired around 20% of its workforce at the height of the pandemic.
The Board has given a boilerplate statement on the vote: ‘The Board understands the issues raised by certain shareholders but is wholly satisfied that the adoption of the Value Creation Plan, the new Remuneration Policy and the Wizz Air Omnibus Plan, all of which are designed to generate superior returns based on the achievement of market-leading targets, are in the best interests of the Company, its shareholders and other stakeholders.’
Whilst on top of this, only 15.97% of the issued share capital participated in the meeting due to Brexit and EU regulations requiring the company to be majority-owned by EU interests.
This story is the latest example of trends in remuneration as commented on by the Workforce Disclosure Initiative in their guest contribution earlier this year.
Last Updated: 30 July 2021