EasyJet founder moves to block executive pay deal

LONDON Mon Jan 30, 2012 4:34am EST

LONDON (Reuters) - EasyJet (EZJ.L) shareholders could be forced to choose between the airline's board and its disgruntled founder Stelios Haji-Ioannou at its annual general meeting next month, bringing long-running tension between them to a head.

Haji-Ioannou, who controls around 38 percent of Europe's second largest low-cost carrier through his EasyGroup investment vehicle, has threatened to block a pay deal that could award 10 executives shares worth some 8 million pounds ($12.53 million) over the next three years.

However, the directors plan to turn the pay vote at the February 23 annual shareholder meeting into a motion of confidence, raising the possibility of mass resignations from the board, according to recent press reports.

Haji-Ioannou, who founded easyJet in 1995, quit the airline's board in 2010 after a row over strategy. Since then he has been critical of the airline's plans to grow its fleet, the size of the payout made to previous CEO Andy Harrisson and has demanded the company returns more cash to shareholders.

"Hopefully our actions will restore sanity to the vicious cycle of fat-cat bonuses," Haji-Ioannou, better known as Stelios, said in a statement on Monday.

"Simply put if shareholders can vote down bonuses at easyJet then bonuses will come down in all listed companies. And that is good for shareholders and pensioners whose pensions are invested in these companies."

Without Haji-Ioannou's backing, it will be difficult for the company to achieve the 50 percent approval needed to get the deal through.

EasyJet's board is preparing to meet investors to discuss the company's remuneration policy in meetings with shareholders ahead of the AGM, according to a source close to the company.

The company believes the payout is justified as the airline performed well in 2011. Late last year easyJet paid its first dividend after full-year profit rose by one third.

Executive pay has been under the spotlight since British banks Royal Bank of Scotland (RBS.L) and Lloyds (LLOY.L) were bailed out with taxpayers' money in 2008.

The chief executive of RBS on Sunday waived a bonus worth almost 1 million pounds after the award angered Britons bearing the brunt of government austerity measures.

Last week the Luton, southern England-based airline defied the gloom surrounding global airlines by posting strong growth in quarterly revenue, helped by an uplift in the number of business travelers flying with it.

Shares in easyJet, which have risen 17 percent in the last month, were 0.5 percent lower at 453.95 pence by 3:07 a.m. ET, valuing the company at around 1.9 billion pounds.

($1 = 0.6383 British pounds)

(Editing by Erica Billingham)

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