If proof was needed that UK fund managers expect more stringent checks and balances on company directors than those from other countries, investors in Wizz Air (WIZZ) have recently provided it. At its annual general meeting on 27 July, they voted through a controversial pay policy that could pay its chief executive, Jozsef Varadi, £100m in 2026.
The directors were anxious to retain Varadi, who founded the Hungarian low-fare airline in 2003, and whose contract had almost expired. He had spearheaded a strategy that, they said, had increased Wizz’s share price since its IPO in 2015 by over three times that of Ryanair (RYA), while easyJet (EZJ) and IAG (IAG) had lost shareholder value over the same period. They said that the proposed pay policy was “critical” for encouraging him to sign a new five-year contract and that it would commit the top team and employees to delivering more shareholder value by giving them a slice of the pie.
Against this, the proposed policy failed to comply with best practice. Originally, instead of having a single long-term share plan for all executives, the committee had tailored one just for the chief executive. After pushback from shareholders, the top 11 executives were included in a similar plan, and the share price targets increased. 90 per cent of the awards depend on the share price, 5 per cent on reducing carbon emissions and 5 per cent on finding more women to fill senior management roles. For employees, a cash bonus plan is to be introduced linked to the growth in shareholder value.