The owner of British Airways, IAG, is bracing for a potential backlash from shareholders over executive pay packages.
Influential proxy adviser ISS has recommended that IAG shareholders reject the proposed remuneration policy, which includes a special share award for CEO Luis Gallego, at the company's forthcoming AGM on 18 June, as reported by Sky News, as reported by .
Gallego is set to receive this award in addition to his salary, having earned £4.6m last year, a significant increase from £3.1m the previous year, amid a surge in global travel demand.
ISS commented in a briefing to its clients, which was obtained by Sky News: "The one-time award is tied to operating margin performance above the company's medium-term ambition."
Further, ISS stated in the report seen by Sky News: "The company states that this proposal aims to align the CEO's compensation package with senior management, address pay compression, enhance competitiveness, and bring the CEO's pay closer to comparable FTSE peers."
The report also noted: "While the company's rationale is noted, material concerns are identified with the concurrent operation of the one-time award and the existing RSP [restricted stock plan], particularly as no reduction has been made to the RSP opportunity."
British Airways owner cashes in post-Covid
IAG's shares have seen a remarkable surge of nearly 90% over the past year, with the stock price hovering around 330p on Thursday and the company's market capitalisation standing at £15.5bn.
As one of several European airlines benefiting from the resurgence in travel demand after the Covid-19 pandemic, IAG - the parent company of British Airways, Iberia, Vueling, and Aer Lingus - has witnessed significant growth.
In August last year, the company reinstated its dividend for the first time since the pandemic, concurrently announcing an interim operating profit of approximately £1.1bn.
Although IAG has encountered some headwinds in recent months, including a decline in transatlantic travel following Donald Trump's election, the firm assured investors in May that the "softness" in US economy bookings had been largely mitigated by the strong performance of its premium cabins.
