AGI boss Walsh slammed for salary as aviation struggles

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British Airways owner IAG’s decision to award outgoing CEO Willie Walsh a bonus of more than £ 800,000 was criticized on Tuesday by an influential shareholder advisory group.

Institutional Shareholder Services urged investors to reject the airline group’s compensation plan, which paves the way for a £ 883,000 bonus for Mr Walsh in 2019, as part of a total package worth a bit less than £ 3.2 million.

ISS said bonuses given to Mr Walsh and other top executives were inappropriate as the aviation industry struggled through the worst crisis in its history.

Although Mr Walsh’s bonus fell from £ 1.05million in 2018, the total compensation was higher than £ 3.03million the previous year.

Salary allocations were announced in early March, just before the scale of the Covid-19 crisis became clear. But ISS said “there was enough evidence at the time to suggest that a cautious approach would be warranted.”

IAG had already warned of a drop in demand for flights when the 2019 compensation was announced. Less than a month later, the airline group canceled its 2019 dividend as disruptions hammered the industry .

In particular, ISS noted that BA, one of IAG’s fleet of carriers, had resorted to government support measures, including the Bank of England’s Covid Business Funding Mechanism.

“British Airways’ use of CCFF is attracting attention, as the Bank of England has since put in place some restrictions on the ability of companies to pay bonuses to senior executives when they have had access to funding in the part of the program, ”ISS said.

IAG said the awards reflected the performance of the previous year, were awarded in early March and that half of Mr. Walsh’s award was in deferred shares, which do not vest for three years.

“Since then, the deteriorating impact of Covid on IAG has resulted in pay cuts for all senior executives and the board,” IAG said.

Glass Lewis, another proxy advisor who issues recommendations on voting at AGMs, urged shareholders to support all motions, including executive compensation.

Mr Walsh is set to retire from IAG after Tuesday’s annual meeting, where shareholders will also be asked to vote on a € 2.75 billion emergency fundraiser to consolidate his balance sheet then as the pandemic pushes carriers around the world into crisis.

Shareholders recommended by ISS should support the rights issue and all other proposals at the annual meeting.

The prospect of a shareholder revolt comes as BA is increasingly criticized for its decision to cut up to 12,000 jobs, or nearly 30% of its workforce, as the pandemic hits demand passengers.

Huw Merriman, chairman of the House of Commons MPs committee on transport, is among the politicians who called on BA to reverse its decision and call the carrier a “national disgrace” earlier this year.

In response, Mr. Walsh said the company “is fighting for its survival.”

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