LONDON (Reuters) – Hungarian budget airline Wizz Air faces a showdown with shareholders on Tuesday, when they vote on a plan to pay its chief executive a bonus of up to 100 million pounds ($138 million) if he meets certain targets.
The airline’s board says the bonus proposal is needed to help retain Jozsef Varadi, whom it says is “the leading global airline CEO” and wants to sign a new five-year contract.
Several shareholder advisory groups have urged investors to vote against the proposals on future bonuses.
Glass Lewis said the company’s “new value creation plan” (VCP) for the CEO and other senior leaders had the potential for “excessive payouts”.
The maximum payout was considered excessive, said Institutional Shareholder Services, adding that “no compelling explanation has been provided to justify the quantum”.
Under the VCP, Varadi will be set a target to double the company’s share price over the next five year period. There are also environmental, social and governance objectives attached to the payout. Over the last five years, Wizz’s share price has risen by over 200%.
Varadi, 55, co-founded Wizz in 2003. The airline has since grown rapidly, spreading from its core eastern European markets of Poland, Hungary and Romania into Britain, Italy and other parts of western Europe.
Wizz has continued to take delivery of planes during the pandemic and add new routes while some rivals have contracted, but like many airlines COVID-19 has caused it problems.
Michael O’Leary, boss of rival Ryanair, has also faced battles over pay. His five-year bonus plan, worth up to 100 million euros if targets related to share price and profitability are hit, scraped through with 50.5% support in a shareholder vote in 2019.
Wizz’s annual meeting takes place at 1300 GMT on Tuesday in Geneva, Switzerland.
($1 = 0.7253 pounds)
(Reporting by Sarah Young; Editing by Mark Potter)