Stelios to vote against easyJet directors' pay

Carolyn McCall, chief executive of easyJet, has seen her remuneration package double to £6.4 million, while chief financial officer Chris Kennedy's has more than doubled to £3.7 million.

That could all be about to change, however, as under the new Pay on Say rules, introduced last October, the budget airline will for the first time face a binding vote on pay, which has to be approved by at least half the shareholders.

The board can be proud of their recent record. The firm's share price rose 90% in 2013, helped by promotion to the FTSE 100 index last March, and the airline reported a 51% rise in annual profits to £478 million in the year to the end of September.

Although easyJet's recent success has placed founder Sir Stelios Haji-Ioannou back in the Forbes billionaire listings, he is planning to use his 37% family stake to oppose the remuneration report at the annual general meeting on Thursday 13 February, saying the amounts are simply too much. The company revealed in December that McCall would be paid a basic salary of £665,000, plus a bonus of £1.2 million and £4.6 million under a long-term incentive plan. Sir Stelios, who founded the airline in 1995, has long opposed boardroom pay at the low-cost airline and voted against McCall's £5 million pay package last year also. The packages are hefty by any comparable standards.

The company has announced a £175 million special dividend to shareholders which is probably sufficiently sweet to get the salary packages voted through. At 77p a share it will be worth £112 million to Sir Stelios and his family, and possibly several hundred thousand pounds to McCall, who has a large shareholding. A majority of shareholders are expected to back the board's remuneration plans.

Investor view

McCall sold £1.32 million of shares on 5 December 2013 and £1.29 million of shares in August 2013. One of only three female CEOs of FTSE 100 (UKX) companies, she has been at the helm since 2010, and has established a rapport with some private shareholders by walking the job.

'Steve Gurr' on the Interactive Investor discussion boards said this week: "Any airline whose MD walks through the aircraft cabin, with a rubbish bag in her hand, talking with passengers gets my vote. Carolyn, along with all senior and middle management, also spent a couple of hours on the Customer Service help line this week - the management are 'hands on'."

The user added that he believes the shares will rise beyond £20 and until they do, he has no intention of selling.

The shares dropped marginally in early trading to 1,718p, against a 52-week low of 970p.

The Say on Pay Regulations introduced two duties - a requirement to produce a directors' remuneration report (DRR) containing specified information that included putting a clear single figure on a director's remuneration package, and a duty to hold a shareholder vote to approve the remuneration report at the company's annual general meeting.

In the future, companies may be required to provide more evidence of the link between pay and performance, although it is not clear whether this might be through best practice guidelines or additional legislation.