IAG, the parent company of British Airways, faces potential turmoil due to wage conflicts
British Airways' Top Dog in the Hot Seat: £2.7M Controversy
Get ready for a stormy shareholder meeting at International Airlines Group (IAG) on June 18. The company is gearing up for a potential backlash as they face scrutiny over the hefty pay package of their CEO, Luis Gallego.
Our sources confirm ISS, a powerful proxy voting advisor, is urging investors to vote against the extraordinary share award worth over £2.7 million that could be up for grabs for Gallego. This bonus is contingent on a three-year performance period concluding in 2028, surpassing the company's medium-term objectives[1][4].
The proposed award isn't just a cherry on top of Gallego's existing salary, annual bonus, and regular incentive award[2]. ISS questions the combination of this one-time award with the current restricted stock plan (RSP), since the RSP hasn't experienced any reduction in opportunity[1][4].
While IAG acknowledges its reasoning for this compensation structure, ISS has identified noticeable issues with the current approach[1]. The viewpoints of opposing shareholders, however, remain undisclosed.
In the aftermath of the COVID pandemic, IAG has reported a strong recovery in performance, posting impressive first-quarter profits last month. Currently trading at around 331p, the company boasts a market capitalization of over £15.7 billion[3].
IAG, the parent company of Aer Lingus and Iberia, hasn't commented on the matter thus far.
[1] Remuneration policy votes are legally binding on companies, although the extent of dissent IAG faces remains uncertain.
[2] The total reward package for Gallego will encompass his base salary, annual bonus, regular incentive award, and, if approved, the one-off share award.
[3] As of writing, IAG's market capitalization is £15.7 billion, with shares trading at roughly 331p.
[4] The share windfall would be in addition to Gallego's current compensation package, which includes his salary, annual bonus, and regular incentive award. This payout is contingent upon meeting specified performance criteria, focusing on attaining an operating margin above the company's defined medium-term aspirations.
Investors are urged to challenge the proposed extraordinary share award worth over £2.7 million for IAG's CEO, Luis Gallego, during the shareholder meeting, as it's perceived as exceptionally high and comes on top of his existing salary, annual bonus, and regular incentive award. The controversy over this war chest could significantly impact the overall business strategy and future investing opportunities in IAG, given the current recovery from the COVID pandemic and the company's strong focus on finance and profitability.
