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Sir Stelios Haji-Ioannou attacks easyJet board over bonuses Sir Stelios Haji-Ioannou attacks easyJet board over bonuses
(40 minutes later)
EasyJet founder Sir Stelios Haji-Ioannou has launched another broadside at the airline's board in a growing row over "fat cat bonuses".EasyJet founder Sir Stelios Haji-Ioannou has launched another broadside at the airline's board in a growing row over "fat cat bonuses".
Stelios attacked easyJet directors, who are said to have threatened to quit the board en masse if they lose a forthcoming pay vote, for treating the company as their "personal piggy bank". Haji-Ioannou attacked easyJet directors, who are said to have threatened to quit the board en masse if they lose a forthcoming pay vote, for treating the company as their "personal piggy bank".
The airline's founder, whose family still holds a 38% stake in easyJet, has tabled a motion to block a proposed pay deal that could award 10 executives shares worth some £8m over the next three years. However, the directors plan to turn the pay vote at the 23 February AGM into a motion of confidence, raising the possibility of mass resignations from the board.The airline's founder, whose family still holds a 38% stake in easyJet, has tabled a motion to block a proposed pay deal that could award 10 executives shares worth some £8m over the next three years. However, the directors plan to turn the pay vote at the 23 February AGM into a motion of confidence, raising the possibility of mass resignations from the board.
"These guys are welcome to resign anytime. I know as shareholders we could easily replace them with talented executives and experience non-executive directors who will cost half as much in bonuses,he said in a statement to the stock market. "These guys are welcome to resign anytime. I know as shareholders we could easily replace them with talented executives and experienced non-executive directors who will cost half as much in bonuses, he said in a statement to the stock market.
"We must take a stand against directors who seem to regard our company as their personal piggy bank to be dipped into at will. The gravy train of £180m free shares issued over the last decade must come to an end now.""We must take a stand against directors who seem to regard our company as their personal piggy bank to be dipped into at will. The gravy train of £180m free shares issued over the last decade must come to an end now."
Without Stelios's backing, it will be difficult for the company to achieve the 50% approval needed to get the deal through. "Simply put if shareholders can vote down bonuses at easyJet then bonuses will come down in all listed companies. And that is good for shareholders and pensioners whose pensions are invested in these companies," Stelios said. Without Haji-Ioannou's backing, it will be difficult for the company to achieve the 50% approval needed to get the deal through. "Simply put if shareholders can vote down bonuses at easyJet then bonuses will come down in all listed companies. And that is good for shareholders and pensioners whose pensions are invested in these companies," he said.
Monday's broadside comes less than a week after Stelios accused easyJet of crafting bonuses with "phoney calculations" when the carrier revealed a bonus of £840,000 for Carolyn McCall, its chief executive. She earned a total of £1.5m in 2011 in her first full year in the job, according to the airline's annual report. Monday's broadside comes less than a week after Haji-Ioannou accused easyJet of crafting bonuses with "phoney calculations" when the carrier revealed a bonus of £840,000 for Carolyn McCall, its chief executive. She earned a total of £1.5m in 2011 in her first full year in the job, according to the airline's annual report.
The dispute centres on shares issued to 10 executives under the company's long term incentive plan this month and will pay out if the airline meets what Stelios described as a "phoney" return on capital employed (ROCE), a measure of how efficiently a business invests its capital. He believes the way easyJet calculates ROCE delivers a figure three times higher than the rate of return using a different method of calculation. The dispute centres on shares issued to 10 executives under the company's long term incentive plan this month and will pay out if the airline meets what Haji-Ioannou described as a "phoney" return on capital employed (ROCE), a measure of how efficiently a business invests its capital. He believes the way easyJet calculates ROCE delivers a figure three times higher than the rate of return using a different method of calculation.
The company reckons the payout is justified as the airline performed well in 2011. Late last year easyJet paid its first dividend after full-year profit rose by one third.The company reckons the payout is justified as the airline performed well in 2011. Late last year easyJet paid its first dividend after full-year profit rose by one third.
Sir Stelios, who founded easyJet in 1995 but quit the airline's board in 2010 after a row over strategy, also took the opportunity, once again, to attack the airline's decision to buy new planes from Airbus. "I would also continue to insist on any new directors stopping the current practice of buying oversized, technically obsolete and over-priced aircraft from Airbus to service non-existent new routes. Haji-Ioannou, who founded easyJet in 1995 but quit the airline's board in 2010 after a row over strategy, also took the opportunity, once again, to attack the airline's decision to buy new planes from Airbus: "I would also continue to insist on any new directors stopping the current practice of buying oversized, technically obsolete and over-priced aircraft from Airbus to service non-existent new routes.
"The $1.3bn order of January 2011 placed just before the profit warning was a big mistake. These Airbuses are simply not required in the current difficult economic climate in Europe and will destroy shareholder value. If Mike Rake [easyJet's chairman] thinks otherwise, he can publish the profitability by aircraft before the AGM. I am sure they have a lot to hide that is why they refuse to publish it." "The $1.3bn (£830m) order of January 2011 placed just before the profit warning was a big mistake. These Airbuses are simply not required in the current difficult economic climate in Europe and will destroy shareholder value. If Mike Rake [easyJet's chairman] thinks otherwise, he can publish the profitability by aircraft before the AGM. I am sure they have a lot to hide – that is why they refuse to publish it."