Boardroom turbulence at easyJet

EASYJET’S board is preparing a charm offensive over directors’ pay after founder Sir Stelios Haji-Ioannou threatened to block a deal that would see ten executives awarded shares worth about £8 million over the next three years.

Directors of the low-cost carrier are planning to use a vote at next month’s AGM as a “motion of confidence” after Stelios, who still owns 37.5 per cent of the shares, vented his fury at the proposed pay-outs.

EasyJet last night refused to comment, but a source close to the company said board members will make a staunch defence of its remuneration policy in meetings with shareholders over the next few weeks.

Reports that the board will suffer mass resignations if the vote does not go its way are heavily overstated, the source said, but directors are leaving nothing to chance and pay will be top of the agenda in discussions between now and the AGM on 23 February.

The board suffered defeat at last year’s AGM after it failed to secure the 50 per cent backing needed to pass the remuneration report. “The company believes in its remuneration strategy and will be discussing it with shareholders between now and the AGM,” the source said.

EasyJet’s directors believe the pay-out is justified as the airline has had a record year, with improvements across the board, including profitability, passenger numbers and customer satisfaction.

The carrier points out that it has proposed to share this success with investors after announcing a total dividend of just under £200m.

However, Stelios earlier this month re-opened a gulf with easyJet’s management when he claimed that directors had manipulated performance targets to trigger a multi-million pound windfall for executives.

He wrote to Prime Minister David Cameron outlining his concerns over the pay-outs, prompting easyJet to respond that Stelios’s accusations were “inaccurate, inappropriate and misleading”.

The 44-year-old entrepreneur, who is seeking to open a low-cost African airline, has also thrown his weight behind proposals by Business Secretary Vince Cable to give shareholders a binding vote on companies’ remuneration policies. At present, such votes are only advisory.

Stelios is believed to have met easyJet’s deputy chairman, Charles Gurassa, and chairman of the remuneration committee, Keith Hamill, to discuss his concerns over the weekend.

The fresh row over pay at the carrier comes at a time when executive bonuses have once again been thrown into the spotlight.

Otto Thoresen, head of the Association of British Insurers (ABI), yesterday dashed hopes that shareholders would play a bigger role in policing City pay when he ruled out “micro-management” of individual directors’ pay.

He told Scotland on Sunday that ABI members would draw a “clear line” at such behaviour.