EasyJet executive pay deal anger
Published 17/02/2011 | 15:09
Budget airline easyJet suffered a shareholder revolt today over an executive pay deal that inflamed relations with founder Sir Stelios Haji-Ioannou.
Sir Stelios, whose family owns a 38pc stake in the group, led a protest vote against easyJet's remuneration report in anger at a retention deal for former chief executive Andrew Harrison - in particular, a £1m six-month fixed agreement.
The no-frills carrier saw 52pc of shareholder votes against its pay report at its annual general meeting in Luton.
A further 25.3 million votes were withheld.
EasyJet said it "acknowledged the concern" expressed by some shareholders, but stressed the retention arrangements were made in a "unique set of circumstances".
EasyJet agreed to pay Mr Harrison £750,000 plus a £250,000 bonus between April 1 and September 30 while it sought a new boss and amid a legal case surrounding a brand dispute with Sir Stelios, which was settled in October.
He left three months into the contract on June 30, after which he was available for advice until the end of September.
Mr Harrison picked up a total of £2.5m in salary and bonuses during 2010, including the six-month fixed cash payment and £1.2m under a "golden handcuff" retention deal agreed in May 2009.
Its recent annual report also revealed he gave up his entitlement to a long-term incentive scheme pay-out of up to 192,325 shares and waived a potential bonus worth up to £590,000 as part of the retention arrangement.
Sir Stelios, who owns the rights to the "easy" brand name, claimed he was not consulted on Mr Harrison's fixed-term package either as a director or shareholder.
Shareholder advisory group Pirc also recommended investors rejected the pay report, citing Mr Harrison's pay and wider concerns on long-term bonus targets.
Sir Stelios said: "This morning's AGM result proves beyond doubt that I am not the only shareholder who feels that Andrew Harrison's compensation package was undeserved and completely unjustified."
He added: "I sincerely hope that this is the last time in the life of this company that a bonus is paid without taking the company's financial results into account.
"No more rewards for failure please."
However, today's vote will not see any of Mr Harrison's pay package clawed back.
Sir Michael Rake, chairman of easyJet, said: "The board of easyJet acknowledges the concern expressed by some at the retention arrangements made in respect of Andy Harrison.
"These arrangements were a one-off and agreed in unusual and difficult circumstances. The company has now moved forward with a new chief executive and chief financial officer."
Sir Stelios also withheld his vote against the re-election of director Sir David Michels, who was interim chairman when Mr Harrison's pay deal was arranged.
But Sir David's re-election was passed by a majority vote in favour.
The airline has had a rocky relationship with its founder in recent years, with a bitter row over strategy and branding culminating in last year's court case.
It was settled, allowing the airline to retain its brand and provide Sir Stelios with a set amount of its annual revenues.
But he has remained a vocal investor, issuing a statement only a month after the court deal, questioning the company's fleet expansion plans.