EasyJet Said to Consider Easing Pay Targets to Hang on to McCall
(Bloomberg) -- EasyJet Plc directors are in early-stage talks about relaxing executive bonus targets in order to hang on to Chief Executive Officer Carolyn McCall and other top managers as a capacity glut and the Brexit vote put the U.K. carrier’s earnings under pressure, people familiar with the plans said.
The EasyJet board wants to make pay goals more achievable amid concerns that McCall and her team may be lured to other companies as aviation bears the brunt of economic and political uncertainty, according to the people, who asked not to be named as the proposals haven’t been made public.
Discussions are preliminary and the remuneration committee hasn’t yet been approached, the people said. Any easing of performance targets would risk a backlash from EasyJet founder and shareholder Stelios Haji-Ioannou, who has opposed fleet growth and earlier moves to bolster pay.
A external spokesman for Luton, England-based EasyJet declined to comment.
McCall, who was earlier this year linked with a move to retail giant Marks & Spencer Group Plc, received 6.2 million pounds ($7.7 million) in the year through September 2015, including 5.4 million pounds from a bonus and long-term incentive plan. The reward was based on a 236 percent investor return for the three previous years and a higher than expected capital return.
While the CEO’s base salary for the year just ended has already been determined, her bonus -- set to be revealed in EasyJet’s annual report due next month -- is likely to shrink following the first fall in full-year profit since 2009 and a 43 percent share-price decline since Jan. 1.
Britain’s biggest low-cost carrier is facing up to a pay issue that’s likely to confront many U.K. businesses to a varying degree should the countdown to Brexit begin to weigh more on the economy and corporate earnings.
U.K. airlines are particularly vulnerable as the weaker pound crimps the purchasing power of holidaying Britons at a time when fares are already in free fall amid an oversupply of seats as economies stutter and a spate of terror attacks across Europe depresses demand.
EasyJet has already initiated other measures to help cope with tougher market conditions and the looming EU exit, with McCall ordering discounts and promotions during the peak summer season for the first time since becoming CEO in 2010 while looking at sourcing an operating certificate in a continental country to help guarantee market access in coming years.
Ryanair Holdings Plc CEO Michael O’Leary last year received 3.2 million euros ($3.6 million) in total compensation, while Willie Walsh, who heads British Airways owner IAG SA, was paid 6.5 million euros. The companies have market values four and three times larger than EasyJet’s respectively.