Wizz Air investors approve chief executive’s bonus package extension plan

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Investors in Wizz Air approved plans to give the company’s chief executive an additional two years to unlock a bonus of £100mn, despite a sizeable opposition at the low-cost carrier’s annual meeting.

Almost 30 per cent of the airline’s free float was cast against a resolution to give József Váradi until 2028 to obtain the one-off award if Wizz Air’s share price hits £120. Shares were trading just under £24 on Wednesday.

The amendment was approved with 74 per cent of the eligible votes supporting the resolution.

Wizz Air said its board believed Váradi was “central to delivering [the airline’s] recovery in the coming years” and the changes to remuneration plans were “in the best interests of the company, its shareholders and other stakeholders”.

However, the proposal had encountered significant opposition from proxy advisers prior to the meeting in Switzerland.

Institutional Shareholder Services said the plan was “not fully in line with UK good practice”, while Pirc said the plans were “highly excessive” and “not considered to be acceptable”.

Pirc argued that a share price was “often outside the control of individual directors and is often more effected by larger market changes”.

Just under two-thirds of the votes at Wizz’s AGM in 2021 were cast in favour of the bonus scheme, with about a third voting against, despite criticism from shareholder advisory groups.

This was because the vote was open only to a small proportion of investors after the airline was forced to water down the voting rights of shareholders from outside the European Economic Area, in order to comply with EU rules around airline ownership following Brexit.

Wizz Air’s largest shareholder is US private equity firm Indigo Partners, which focuses on air transport and owns 24 per cent of the company. Indigo’s founder William Franke has been chair of Wizz Air for almost two decades.

The carrier had grown rapidly over the past five years, becoming one of the most significant companies in European aviation thanks to cheap fares made possible by an ultra-low cost business model. The airline was one of the first carriers to recover to its pre-pandemic share price in late 2020, as investors backed its aggressive expansion plan. But its shares have halved since Russia’s invasion of Ukraine last year.

Wizz Air’s move follows that of Ryanair, which extended and adjusted the comparable package for its chief executive Michael O’Leary last year. Andrew Lobbenberg analyst at Barclays said Wizz Air’s move had the logic of following its lead rival, but Ryanair had also “included an increase to the target profit level required to trigger it”.