Wizz Air is proposing a bumper pay deal for its boss, who it has described as “by far the worst compensated CEO” of major European airlines, amid fears his current £710,000 salary may make the position untenable.
The airline wants to give Jozsef Váradi a restricted share award next month representing 300% of his £710,534 salary, arguing his compensation doesn’t reflect a unique “parade of black swan” events faced by Wizz Air. It also proposes a further share-based reward amounting to 500% of Váradi’s salary in 2026.
The airline has been particularly affected by geopolitical conflicts, including Russia’s invasion of Ukraine and the Isreal-Hamas war. In addition, Wizz Air has been forced to ground dozens of planes owing to problems with its Pratt & Whitney engines. Several airlines are also struggling with low fares hitting their profit margins.
These challenges have left Váradi’s hopes of a £100 million bonus as little more than a pipe dream. Váradi will bag the bonus if Wizz Air’s shares hit £120. However, shares currently sit at around £13.59, having experienced a 38% fall so far this year.
Investors have begun shorting the airline in a bet that it will suffer more than its competitors, Ryanair and EasyJet, from price wars, debt, and continued struggles with its engines.
Managing so many crises with little thanks, Wizz Air fears, could hit the morale of Váradi, who has been CEO for more than 20 years, to a point where the job is no longer worth doing.
In a chart presented to investors, Wizz Air pointed out that Váradi’s compensation for 2024 would be a third of what it was in 2019.
Stephen L. Johnson, the interim chair of Wizz Air’s Remuneration Committee, said in a note that Váradi is “by far the worst compensated CEO in the peer group and, absent action, he will remain in that untenable position.”
Investors are set to vote on the resolution at the company’s AGM on Wednesday.
The mood music coming out of Wizz Air has felt bleak for several months, and it hasn’t gone unnoticed by Váradi.
Speaking in May, the Wizz Air CEO said he regretted laying off 20% of Wizz Air’s workforce during the COVID-19 pandemic when air travel was heavily reduced.
The main reason for his regret, he said, was because the cull “kind of dented the morale of the company.”
“We looked at it as an economic issue, or a financial issue,” Váradi said. “And I don’t think we gave sufficient credit for the morale impact of it. So that’s clear early learning, we have not fallen into the trap again.”
