Wizz Air’s chief executive said that the extension of a bonus incentive package for him to unlock a £100mn shows “the prevalence of capitalist spirits” despite the significant opposition of some investors.
The resolution passed by the shareholders on Wednesday gives Jozsef Varadi until 2028 instead of 2026, for him to receive his one-off bonus. The bonus will be triggered when the share price of the company, which on Thursday was around £23, reaches £120.
The amendment was met with significant opposition. Nearly 30% of the airline’s free-float voted against it. Proxy advisor Pirc stated that the plans were “highly excess” and “not deemed acceptable”. Institutional Shareholder Services stated that the plan was “not in full compliance with UK good practices”.
In an interview, Varadi said that “common sense prevailed.” He said that “[investors] voted to create €10bn in shareholder value with [a] 1-percent commission rate.” “Wouldn’t you do that?”
He said the company has “corresponding schemes on all levels”. He said: “Let’s remember that this isn’t just the chief executive remuneration. [It] flows throughout the entire [business]”.
Wizz Air developed the scheme in two years, when its share price was over £40. Since then, the company has been hurt by its unhedged oil exposure in response to Russia’s invasion.
Varadi is facing a reputational crisis for the way it handled compensation to customers following last year’s travel disruption.
The airline reported that revenues for the three-month period ending June 30 were up 53 percent to €1.2bn, compared to the same period in the previous year. This was due to a rebound in air travel. The airline has turned a profit of €61.1mn for the quarter, up from a loss in 2022 of €452.5mn.
Wizz Air reported record traffic for the start of summer. The airline’s passenger numbers reached 15.3mn and ticket sales increased by 76 percent.
Analysts at Bernstein stated that the net profit was “substantially above consensus” due to a more favorable pricing environment and reduced costs.
Varadi noted that Wizz Air’s shares have “the potential” of reaching the £120 goal by 2028. He also mentioned “macroeconomic pressure points” on the business, including the conflict in Ukraine.
Wizz Air was forced to limit its flight capacity during the first half of the year due to “continued supply chain and infrastructure limitations” and newly identified problems with Pratt & Whitney engine.
Varadi stated that the company will “seek significant compensation” from manufacturers if 12 of its Pratt & Whitney GTF engine were found for inspection.
He added that the Pratt & Whitney GTF engines are causing a shortage of spares on the market.