Wizz Air Holdings Plc updates
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Wizz Air’s chief executive Jozsef Varadi has won shareholder approval for a potential £100m payout in a controversial vote that was open only to a small proportion of investors because of Brexit.
Just under two-thirds of the votes at Wizz’s annual general meeting were cast in favour of the bonus scheme, with about a third voting against. But the votes represented just 16 per cent of the company’s issued share capital, far below the average for a UK-listed company and much lower than the previous turnouts at the company.
In late December Wizz significantly watered down the voting rights of investors from outside the European Economic Area, in order to comply with EU rules around airline ownership following Brexit. Irish carrier Ryanair took similar action.
EU regulations demand that airlines with EU operating licences are majority owned and controlled by nationals of the bloc, Switzerland, Norway, Iceland or Liechtenstein.
“The Brexit component has substantially reduced the number of shareholders that can vote,” said Mark Simpson, an aviation analyst at Goodbody.
Wizz’s board consulted investors before drawing up the pay scheme, and received the most pushback from UK-based institutions, according to one person familiar with the matter.
Wizz said its board had “engaged extensively with shareholders to discuss our approach to remuneration and to seek feedback on our proposals.
“The board understands the issues raised by certain shareholders but is wholly satisfied that the adoption of the [bonus scheme and remuneration policy] are in the best interests of the company, its shareholders and other stakeholders,” it added.
Shareholders shot down a short-term remuneration plan at last year’s AGM, when investors owning about 80 per cent of the issued share capital voted. According to Equiniti, about 75 per cent of FTSE 100 share capital is voted on average, falling to 54 per cent for smaller UK-listed companies.
The board redesigned the remuneration plan to beef up the share price target after early discussions with shareholders and were always confident it would pass.
Shareholder advisory groups Glass Lewis and ISS had urged investors to reject the pay plan, while the UK Investment Association’s influential voting advisory service Ivis issued its highest level of warning in the run-up to the AGM.
Under the newly approved pay plan, Varadi will be granted up to £100m in shares if London-listed Wizz’s shares climb from their current £47 to £120 over the next five years.
The airline, which is based in Hungary, has laid out ambitions to rapidly grow its footprint across Europe as the aviation industry emerges from the pandemic.