European airline CEO pay in 2020
This short post is in some ways a bit of a postscript on yesterday’s much longer article in which I analysed Virgin Atlantic’s 2020 results.
One of the things I noted from the accounts was the remuneration of the company’s “highest paid director”, which I assume to be their CEO Shai Weiss. I was a little taken aback by the size - a cool £1.6m. Admittedly, that was down on 2019 when he was paid £3.3m. But that’s a little rich in my books for an airline that has fired half its workforce during the year and couldn’t afford to pay its trade creditors.
I thought I would take a look into how that compared with the pay packages of the “big six” European airlines. Here are the results:
So Shai comes in as the second most highly paid European airline CEO during the year. Unlike the other companies, Virgin don’t disclose how much of this package came in basic salary, other annual benefits and bonuses, or from the vesting of long-term incentive plans.
Bonuses like these could relate to earlier years and have been paid in early 2020 before the scale of the crisis was apparent. But since Virgin Atlantic was loss-making in 2019, it still seems pretty odd to me. I’m sure creditors and employees alike will be asking a few searching questions.
The company which makes Virgin look almost frugal is Lufthansa. Carsten Spohr took home a cool £3.3m last year and spoiled my headline about Shai being the highest paid airline CEO in Europe. In part, Carsten’s remuneration was inflated by the vesting of multi-year incentive plans. But even his basic salary was way above those at other airlines.
Of course, the CEOs at all of these companies took temporary pay cuts during the year. Leading the way was Michael O’Leary at Ryanair. Already the lowest paid amongst this group, he took a 50% cut from April onwards. Michael makes almost all of his money from his shareholding and stock option awards in the company, so the salary is a bit of a rounding error for him. But it makes a good headline.
The next biggest cut was at Air France - KLM, whose boss Benjamin Smith signed up for a 25% cut in salary “during the crisis”. He also waived a personal bonus of 122% of his salary, although this was only after howls of protest from the governments of France and Holland, who were being tapped up for billions of euros of government bail outs at the time.
In the case of WIzz, József Váradi took a 25% cut in March, zero salary in April and a 15% cut from May onwards.
At IAG, Willie Walsh was in the CEO seat until September, when Luis Gallego took over. They both took a 20% cut from April onwards.
Lufthansa’s Carsten Spohr didn’t seem to face the same political pressure as Benjamin Smith, despite taking almost as much state bailout money. He was the highest paid airline CEO before the crisis and as well as taking his bonuses, he only cut his salary by 20% for six months.
Also going with a short-lived reduction was Johan Lundgren at easyJet. The 20% cut only lasted three months, whereas the crisis has lasted over a year and is still not over by a long way.
At Virgin Atlantic, we know that Shai reduced his salary for four months by 20%. Perhaps the period of that reduction got extended as the crisis dragged on? We can’t tell from the accounts, but that £1.6m figure suggests perhaps not.
