EasyJet battle heats up as SLI backs airline’s board over remuneration

Published on Monday 13 February 2012 12:12

STANDARD Life Investments (SLI) has gone public with its backing of the EasyJet board in their remuneration battle with the budget airline’s founder and leading shareholder, Sir Stelios Haji-Ioannou.

SLI, which holds 6.5 per cent of the budget airline, is joined in its backing for the board in the row over allegedly too generous bonus schemes by M&G and Sanderson Asset Management. The three institutions together speak for 17.5 per cent of the shares.

Sir Stelios and his brother and sister, who are voting against EasyJet’s remuneration report at the AGM on 23 February, speak for 37.4 per cent.

SLI said in a statement that it “is supportive of the management team and its current strategy, which we believe will deliver value for shareholders”.

It is the second example of unusually high‑profile shareholder activism by the Scottish asset manager in less than a week.

SLI has revealed that it is refusing to back the $90 billion (£57bn) proposed merger of commodities trading giant Glencore and mining major Xstrata because it claims the deal undervalues its shares in Xstrata.

EasyJet chairman Sir Michael Rake and Stelios clashed yet again yesterday over the bonus schemes and the re‑election of directors.

Rake said the recommendation from ISS (the voting arm of the National Association of Pension Funds) in favour of EasyJet’s remuneration report, and the “blue top” report (signifying no concerns) from the Association of British Insurers (ABI), “will guide the majority of the company’s institutional shareholders”.

And he said that the recommendations for the re‑election of all directors by the ABI, Glass Lewis (a US shareholder adviser) and ISS “demonstrate the strong support EasyJet’s board has from its institutional shareholders”.

Rake added: “This has been illustrated by the commitment to vote in favour of all resolutions by EasyJet’s three largest institutional shareholders – Standard Life, M&G and Sanderson.”

However, Stelios hit back, pointing to criticism of the remuneration report and election of directors by corporate governance advisor PIRC.

The body has urged shareholders to vote against the election of Adele Anderson, a recently appointed non-executive director, as she could not be considered independent having previously worked with Rake at accountancy group KPMG.

Stelios said shareholders needed to vote against Anderson to prevent “a packing of the board”.

He added: “Ms Anderson has no prior PLC board experience and was clearly drafted as an ally to Mike Rake.”

Stelios also said he believed SLI and some other City investor backers of the EasyJet board were “conflicted”, citing the airline previously placing a big order for aircraft from Airbus and its parent company, EADS.

“I recently discovered that Standard Life is managing the EADS/Airbus pension fund of some £4.6bn,” he said.

“If the fees are circa 2 per cent that gives Standard Life an income stream of around £100 million a year.

“The stake of Standard Life in EasyJet is valued at about the same number. I think their shares should be excluded from any future voting on aircraft orders.”

Stelios said he also noted that KPMG were auditors to Airbus and EADS.

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richardm

Monday, February 13, 2012 at 06:34 PM

"It is the second example of unusually high‑profile shareholder activism by the Scottish asset manager in less than a week" Err, no.... it's a case of I'll scratch your back if you scratch mine. Standard Life is supporting its mates on the board help themselves to shareholders' money. Presumably this is with a view to when its own board's remuneration is scrutinised. Instituational shareholders and non-executive directors all stick together. If it were voting against, that would be shareholder activism. Funny isn't it? For us plebs, if you do your job properly or well then you get paid. Do it badly you get sacked. For directors, you get paid whatever and pay yourself a whopping bonus anyway.

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