Sir Richard Branson’s Virgin Galactic space tourism firm handed its new chief executive a $21 million windfall for his first five months in the job.
Virgin Galactic appointed Michael Colglazier, a former Disneyland theme park boss, as chief executive and president last July.
His $21.25 million (£15 million) pay packet – covering just over five months between his start date on July 20 and the end of last year – included $442,308 of his $1 million annual base salary and a $500,000 signing on bonus, with a further $500,000 to be paid this summer.
Bold mission: Michael Colglazier has left the Disneyland hotseat for the one at Virgin Galactic
The bulk of his pay was awarded through $20.3 million of awards and options for more than a million Virgin Galactic shares, which Colglazier can cash in at agreed instalment dates over the five years from starting the job.
According to company documents, Colglazier’s pay package for last year was around 90 times the $235,574 median average salary for Virgin Galactic employees.
Colglazier’s signing on bonus was paid as other businesses in Branson’s Virgin Group empire struggled to survive the pandemic.
Last summer, Virgin Atlantic – which is 51 per cent owned by Branson’s Virgin Group – was scrambling to secure a £1.2 billion rescue plan to ensure its survival and has now cut 4,300 jobs.
Meanwhile, Branson chipped in on a £20 million loan to gym chain Virgin Active, which now needs a fresh rescue deal after months of lockdown.
Virgin Galactic, based at Spaceport America in New Mexico, is Branson’s bold vision to become a pioneer in space travel, in what has been dubbed a ‘billionaire space-race’ against rival projects by Amazon founder Jeff Bezos and Tesla founder Elon Musk.
The space tourism enterprise has helped prop up other Virgin businesses in the pandemic, after Branson sold shares in US-listed Virgin Galactic to inject more than $350 million into his hardest-hit firms.
However, Virgin Galactic has yet to make a profit after numerous delays to the launch of its first passenger spaceflight, currently scheduled for early next year – some 15 years later than the original target date in 2007. It had $666 million of cash on December 31, but made a $273 million net loss for 2020 as it invests in test flights and developing spacecraft.
In its latest update last month, Virgin Galactic said the next test flight for its VSS Unity spaceship has been pushed back by three months to May, and that Branson’s maiden test flight has been delayed to the summer.
Shares in the firm plunged by 14 per cent on the news, almost wiping out share price gains at the start of this year that had boosted Branson’s 26.3 per cent stake in the $6 .5 billion firm. Shares currently stand at $27.29, up from a low of $10.49 last March.
The rollercoaster ride as Virgin Galactic battles to finally achieve commercial lift-off is understood to be why the firm ties ‘a significant proportion’ of its executive pay to the firm’s share price. A spokesman said: ‘Virgin Galactic incentivises its executives through a combination of salary, bonus and stock. This aligns interests of the management team with those of the shareholders. The company has ambitious plans as it moves towards commercial operations.’
Into orbit: Virgin Galactic has taken more than 600 bookings for its spaceflights
Colglazier achieved record growth when he ran Disneyland in Anaheim, California, home of the Space Mountain rollercoaster. He joked to an analyst when he joined Virgin Galactic: ‘You may not have known, Space Mountain is actually my favourite attraction.’
If he meets maximum performance targets at Virgin Galactic as it holds its critical test flights in the run-up to commercial service, he will receive a $1.5 million annual bonus. His contract also gives him a free Virgin Galactic spaceflight for himself and three friends. Virgin Galactic has taken more than 600 bookings for its spaceflights, with tickets sold for between $200,000 and $250,000 per person. It eventually hopes to operate hundreds of 90-minute trips each year from spaceports around the world, taking wealthy tourists into sub-orbit – a peak altitude of about 60 miles above the Earth.
Celebrities Ashton Kutcher, Leonardo DiCaprio and Justin Bieber are reportedly among those that have booked seats. Branson listed Virgin Galactic on the US stock market in 2019 through a merger backed by Silicon Valley investor Chamath Palihapitiya, who is Virgin Galactic’s chairman, and Abu Dhabi’s sovereign wealth fund, Mubadala.
On Friday, Palihapitiya offloaded shares worth around $213 million but said he remains ‘dedicated’ to Virgin Galactic’s mission.
In the UK, Branson is a partner for Spaceport Cornwall at Cornwall Airport, which is to be used as a base for sister firm Virgin Orbit. It uses modified jumbo jets to launch small satellites into space.
Recently, Branson hinted he could operate Virgin Galactic flights from Cornwall too. But the leader of the county council, Julian German, poured cold water on the idea, saying the council ‘will not be taking forward any space tourism operation from the airport’.
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