Easyjet board sees off Stelios rebellion

Shareholders voted on Easyjet's controversial remuneration report and the re-election of chairman Sir Michael Rake last night. The board was victorious, despite 44.7% of votes against - mostly from Stelios' family.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
The squabbles at board level of no-frills airline Easyjet make Dallas look like The Brady Bunch. Last night, at the firm’s annual meeting, a vote was cast on whether to push on with Easyjet’s expansion plans, re-elect Rake, and to sign off on a new remuneration report that will allow chief executive Carolyn McCall (on £2m a year - a salary that Stelios has branded ‘unjustifable’) to cash in £3m-worth of shares from July.

These Easyjet shindigs always turn into a bunfight. While Stelios, whose family is still a major shareholder in the business, wasn’t there in person, he and his ilk thew their entire 37% stake against the board. Stelios also made sure his intermediary kicked up quite the stink. He demanded guarantees against potential aircraft orders and called for increased dividend payouts.

This is the third year in a row that Stelios has tried to stage a rebellion at the annual meeting. Despite his best efforts, however, Sir Michael Rake was re-elected to the board (albeit by a narrow margin) and Stelios was defeated on all counts.

The Monaco-based multi-millionaire has thrown his toy planes out of his pram because he wants the airline to scale back on expansion and stop ordering new aircraft. Why? Because he would rather that profits were diverted into investors’ pockets as dividends, of course. But his demands aren’t entirely self-serving, he argues. It’s just too risky to pursue aggressive growth in the current economic climate. Seats could be left unsold, and the travel market could be flooded with new routes, driving down earnings per customer. Uh-uh.

With characteristic sangfroid, chairman Sir Michael took the opportunity to pointedly ask the fiery Easyjet founder to curb his public outbursts in future and conduct his business with the board ‘in private’.

Easyjet’s rapid growth – the firm reported a pre-tax profit rise of 27.9% to £317m last year - could soon see the firm enter the FTSE 100, Rake pointed out, and FTSE 100 firms can’t be seen to conducting scraps in public. ‘In the interests of London's reputation, and the company's reputation, we should have constructive dialogue, and that dialogue should of course be in private in the first instance,’ was Rake’s diplomatic line.

Stelios’ attempts to oust Rake have seemed increasingly impotent in recent months, given that his rival is stepping down as chairman this summer. Pundits argue that Stelios has become obsessed with staying in the media limelight, and that his outbursts, occurring with increased regularity, are just an attempt to grab column inches. Only last month, Stelios threatened to sell his family’s entire Easyjet shareholding if the board bought a single new aircraft.

Rake has insisted that Stelios’ consistent jibes and public character assassinations have not influenced the timing of his departure. ‘This is just the right time for a new chairman,’ he says. ‘I have no personal problem with meeting Stelios. I'm not offended. I'm not going to be bullied by anyone or pushed into anything.’

But Rake has warned his potential successor, the current deputy, Charles Gurassa, not to ‘rise to the bait on unnecessary provocation’ and to ‘remain totally calm, act only in the interests of all the shareholders in the long term’.

In short, to survive at the top of the UK's fastest-growing airline, you need a thick skin - rhino hide, in fact - to deal with Stelios.

To find out more about the trials and tribulations of life as chief exec of Easyjet, look out for the May issue of Management Today Magazine, where Carolyn McCall reveals all.

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