IAG shareholders revolt against ‘excessive’ share award to boss Luis Gallego
Shareholders at British Airways’ parent company IAG have revolted against the “excessive” share award given to boss Luis Gallego.
Proxy voting agency Glass Lewis told investors to vote against the policy at IAG’s annual general meeting next month, as the proposal to increase Gallego’s share award from 100pc of his salary to 150pc under IAG’s restricted stock plan was “misaligned with the stakeholder experience,” Sky News first reported.
“We expect the [remuneration] committee to show restraint in its granting practices when a company has seen a steep decline in share price,” the firm told shareholders.
“Further, we note that it is common practice for committees to reduce grant levels for share based incentive awards in such circumstances.”
IAG rebutted against the rebellion stating Gallego’s salary took a huge cut over the last few years.
“IAG´s chief executive has seen a significant remuneration reduction in the last two years”, said the airline group.
“He did not receive his long-term incentive (2018 and 2019) and his 2020 bonus, [and he] decided to forego his £900,000 bonus in 2021 in addition to undertaking voluntary salary reductions in 2020 and 2021.
“The proposed amendment to his long term incentive plan, where shares vest in three years-time plus two years holding period, makes his award opportunity more competitive and aligns it with other IAG senior management.”
Commenting on IAG’s decision, aviation analyst Sally Gethin said the move was a “really bad look” for the company, who is caught in a cycle of “rinse and repeat” when it comes to awarding large sums to its bosses.
In 2020 former IAG boss Willie Walsh was awarded a £883,000 bonus as part of a £3.2m earnings package at a time when the company was struggling financially because of the pandemic.
The share award is also a bad look for its subsidiary British Airways, who has been delivering “shoddy service, flight cancellation and delays” to customers.
“Although the rationale for the pay reward to Gallego may be based on internal corporate policies, it gives out the impression of airlines engaging in ‘fat cat’ rewards when consumers are feeling the pinch,” Gethin told City PM
The company made the headlines earlier this month when it posted its quarterly results.
In the first three months of 2022, IAG reported passenger numbers were at 65 per cent of 2019 levels, 7 per cent up compared with the previous quarter. In the same period, the company managed to narrow its losses from €1.08bn to €731m.