Sir Stelios Haji-Ioannou, founder and largest shareholder in easyJet, today (07/02/12) won a powerful backer in his campaign to curb excessive top-level remuneration packages at the budget airline.

Leading independent proxy advisor Glass Lewis has  recommended that shareholders vote down the directors’ remuneration report contained in the company’s annual accounts. Although any vote against the report would be purely advisory, Glass Lewis’ recommendation will be seen as endorsing Sir Stelios’ long campaign against the easyJet’s board’s excessive pay packages. 

Glass Lewis considered (i) the overall structure and policies that govern remuneration levels and drive performance; and (ii) the easyJet remuneration committee's disclosure of its policies and procedures. While the second was given a “fair” rating,  the first was described as “poor”. In particular Glass Lewis criticised the report’s absence of any consideration of shareholder return in setting pay and the low level of disclosure regarding the calculation of performance targets. It also rejected the short time period (one year) over which performance was measured.

In the past Sir Stelios has based his campaign on easyJet’s use of exaggerated calculations of returns on capital employed (ROCE) to inflate the board’s pay packages. This was emphatically endorsed by Glass Lewis, who concluded “ we are concerned that the Company's long-term remuneration structure fails to adequately align executive and shareholder interests. Accordingly, we must recommend that shareholders vote AGAINST this proposal.”

Sir Stelios described Glass Lewis’ intervention as “a significant step in forcing our board to put shareholder interests first – ahead of their own . “

“The directors must now stop using this “heads I win, tails you lose” calculation for their bonuses and do the decent thing by accepting they have been caught out using our company as their personal piggy bank. The message has gone out loud and clear; this cashpoint is going to stop paying out!”