Wizz Air has suffered a huge shareholder revolt against its plans to hand its chief executive a bumper pay deal.
The airline is looking to give Jozsef Váradi a restricted share award which would represent 300 per cent of his £710,534 salary.
The listed company has argued that Váradi’s compensation doesn’t reflect a unique “parade of black swan” events faced by Wizz Air.
Wizz Air has also set out plans for a further share-based reward which would amount to 500 per cent of his salary in 2026.
At its annual general meeting, 34.42 per cent of shares were cast against the company’s remuneration policy.
Váradi had been in line for a £100m bonus but Wizz Air has been hit by a variety of challenging including Russia’s invasion of Ukraine and the Isreal-Hamas war.
The airline has also been forced to ground dozens of planes owing to problems with its Pratt & Whitney engines.
However, the CEO would be handed the bonus if the firm’s share price hits £120 – but Wizz Air’s shares are currently trading ar around £13.5.
At the AGM, 32.23 per cent of shares went against Wizz Air’s Omnibus Plan.
More than 14 per cent of shares were also cast against the re-election of Barry Eccleston as a non-executive director, while that number rose to 20 per cent in the following independent vote.
Eccleston joined the board in May 2018 and was previously CEO of Airbus Americas.
Wizz Air board to consult shareholders
In a statement issued to the London Stock Exchange, Wizz Air said: “The board notes that resolutions three, four, eight and nine, being approval of the directors’ remuneration policy, approval of the amendments to the rules of the Wizz Air Omnibus Plan, re-election of Barry Eccleston as a director and re-election of Barry Eccleston as a director (independent shareholder vote), respectively, had more than 20 per cent of votes cast against following the proportionate disenfranchisement of non-qualifying nationals.
“In the coming months, the board will continue to consult with major shareholders on remuneration and wider governance matters.
“In accordance with the UK Corporate Governance Code, the board will publish an update on this engagement within six months of the AGM.”
Wizz Air added: “The board is pleased that most of the AGM resolutions received broad-based shareholder support and appreciates the time taken by shareholders to engage with the company in recent months.”
In a separate statement, a spokesperson for Wizz Air said: “The board is pleased that investors recognise the need for appropriate incentives for the CEO and management team during this period of significant external challenges for the company and the airline industry.
“Effective execution of the company’s growth strategy is expected to benefit all stakeholders, including employees, customers, and shareholders.
“The board appreciates shareholders engagement with the company in recent months and will continue to consult with shareholders on remuneration matters in accordance with the UK corporate governance code. An update on engagement will be published within six months.”
Sharp profit drop amid short sellers betting against airline
The AGM comes after City AM reported that short sellers are increasingly betting against Wizz Air as the budget airline’s shares continue to perform poorly this year.
The latest data from S & P Global Market Intelligence shows shares out on loan, a sign of short interest, represent 13 per cent of Wizz Air’s stock available for trading.
Shares in Wizz Air are down over 40 per cent this year to date after the airline was forced to constrain capacity due to supply chain issues with its Pratt & Whitney-manufactured engines.
It has also fared worse than competitors from the ongoing conflicts in Ukraine and the Middle East, given it operates a large number of routes to areas impacted.
Wizz Air profits fell sharply in the carrier’s most recent quarterly results, dropping from €80m (£66.9m) to €45m (£37.6m).
The figures missed expectations by a wide margin, forcing Wizz to lower its net profit guidance for the full financial year.