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Struggling Wizz Air has conceded that its chief executive is unlikely to deliver on performance targets needed to earn a controversial £100mn bonus after a “parade of black swans” hammered its shares.
Shareholders in the London-listed low-cost airline have instead backed a new bonus scheme for József Váradi that includes a one-off share award worth around €2.3mn for this year, and the opportunity to earn around €4mn per year in shares as bonuses from 2026.
Stephen Johnson, interim chair of the remuneration committee, said on Wednesday that a new plan was needed to “motivate” and “retain” Varadi, who was “by far the worst compensated CEO” among his airline peers.
Wizz Air’s ambitious growth plans have been knocked by a string of crises, most notably the grounding of scores of its aircraft because of possible engine problems. Its shares have slumped 39 per cent this year, while those of BA owner IAG have risen by almost a third.
Váradi was paid a total of €1.4mn in Wizz Air’s 2024 financial year, down from €4mn in 2019. That compares with IAG chief executive Luis Gallego, who was paid £3.1mn in 2023, and easyJet’s Johan Lundgren who received £2.2mn. Both these companies have enjoyed a smoother ride as the industry has recovered from the pandemic.
Váradi, who was one of the airline’s founders in the early 2000s, has grown it into one of the most significant players in European aviation after masterminding a growth strategy that prioritises cutting operational costs.
Wizz Air offered Váradi a £100mn bonus in 2021 if he could raise its share price to £120 by 2026, with shareholders last year approving a change to give him until 2028 to achieve the target.
But with shares trading at £13.45 at close on Wednesday, Johnson told shareholders in notes accompanying its AGM notice that the old plan was “underwater” and the chances of Varadi hitting his targets were “remote”.
“József has been instrumental in leading the company to success . . . and the Board believes that it is essential that he be retained to lead the company through its challenges for the next few years. However, that objective is at risk,” Johnson said.
Váradi has promised to significantly grow the airline this decade, and is working towards a long-term target to grow passenger capacity by 20 per cent a year and have 500 aircraft by 2030, although he previously said this could slip to 2031 or 2032 because of supply chain problems.
The airline has been hurt by a large exposure to Ukraine, Russia and Israel, where operations have been disrupted by war. It has also been forced to ground around 45 planes, about a fifth of its fleet, because of potential problems with their Pratt & Whitney engines.
“Unfortunately, the parade of ‘black swans’ has continued,” Johnson said.
The old £100mn bonus scheme will still be in place, but any payouts from the newer scheme would be deducted from it.
The new scheme offers Varadi a one-off share award of three times his €775,00 base salary, worth €2.3mn, payable in October.
It also contains a new annual incentive plan from the 2026 fiscal year, worth up to five times his salary, or €3.9mn in shares at current levels.
Wizz Air suffered a sizeable shareholder rebellion at the AGM on Wednesday, where only 63 per cent of shareholder voted to support the changes.
In a statement, Wizz Air said: “The board is pleased that investors recognise the need for appropriate incentives for the CEO and management team during this period of significant external challenges for the company and the airline industry.”