Willie Walsh has stepped down from the top job at British Airways owner IAG amid a furious investor protest over pay – after nearly one in three shareholders failed to back his remuneration deal.
The International Airlines Group (IAG) revealed only 71.6 per cent of investors approved executive pay awards at its annual shareholder meeting in Madrid, with around 20 per cent of votes cast against.
Mr Walsh’s payout takes the former pilot’s earnings for 2019 to £3.2 million, including a £833,000 annual bonus.
His pay was approved before coronavirus sent IAG’s airlines into crisis in March, but the deal now appears even more controversial given the thousands of jobs being axed.
Mr Walsh also stands to pick up a potential 1.1 million shares worth £5.2 million under previously awarded long-term bonus schemes over the next four years, if performance targets are met.
A further 258,910 deferred shares worth around £1.1 million are due in annual payouts between March this year and March 2022.
International Airlines Group (IAG) chief executive Willie Walsh (pictured) has stepped down from the top job at British Airways owner IAG amid a furious investor protest over pay
The firm’s annual report showed Mr Walsh enjoyed a 5.5 per cent pay hike in 2019, up from £3.03 million in 2018, as he landed an £883,000 annual bonus and £1.2 million in shares under a long-term incentive scheme.
IAG saw its remuneration report approved at its shareholder meeting this week, but the sizeable investor protest ensured a turbulent last day for Mr Walsh after a 15-year career with the firm.
The company said it was ‘disappointed’ at the remuneration report vote.
In a statement, it added: ‘The board will continue to engage with shareholders to fully understand their concerns (as part of wider engagement in relation to the renewal of our directors’ remuneration policy in 2021) and will publish, in accordance with the UK Corporate Governance Code, an update on this engagement within six months of the this AGM.’
The International Airlines Group (IAG) revealed only 71.6 per cent of investors approved directors’ pay awards at its annual shareholder meeting in Madrid, with around 20.6 per cent of votes cast against. Pictured: Stock image
Mr Walsh’s payout takes the former pilot’s earnings for 2019 to £3.2 million, including a £833,000 annual bonus. Pictured: Willie Walsh
Mr Walsh, from Dublin, started out as a pilot with Aer Lingus in 1979 before he became chief executive in 2001.
He earned the nickname ‘Slasher’ after he cut 2,500 jobs at the Irish airline, but his ruthlessness got him noticed and he took over as CEO at BA.
IT DATA BREACH SET TO COST BA BILLIONS
In 2019, British Airways was accused of trying to limit a potential £3billion payout over a data breach that saw cyber-hackers steal more than 500,000 customers’ details.
Some 185,000 customers had their details compromised between April and July 2018, and a further 380,000 were hit by the breach between August and September.
Victims could receive as much as £16,000 each in cases where psychological injury is extreme, while average compensation payments for distress could reach £6,000.
The stolen data included login details, bank card details, and travel booking information – plus names and addresses.
Hackers even managed to get their hands on the three-digit security code on the back of customers’ bank cards.
The cyber attack – known in the industry as ‘pharming’ – remained undetected by BA for several months.
The chief executive, 58, handed over the reins of IAG today to successor Luis Gallego, the boss of BA’s sister airline Iberia.
The Irish ex-pilot delayed his handover by six months due to the coronavirus crisis, having originally planned to step down on March 26.
His replacement, Mr Gallego, is an aeronautical engineer from the Polytechnic University of Madrid who started out in the Training Service of the Air Force.
He worked for Spanish airlines Aviaco, INDRA and, between 1997 and 2006, in several positions in Air Nostrum – where he was technical director of the maintenance workshop until his signing by Clickair as Production Director until the merger of the airline with Vueling.
Mr Gallego was Production Manager at Vueling with responsibility for flight operations, instruction, quality and safety, maintenance and operations.
He was commissioned by Iberia to found Iberia Express in 2012, where he was CEO until his passage to Iberia, first as CEO, on March 27, 2013, and since January 1, 2014 as executive chairman of the company.
Mr Gallego will receive a base salary of £820,000 versus Mr Walsh’s £850,000, as well as possible cash and share bonuses worth up to £3.3 million a year.
Speaking at IAG’s annual capital markets day on November 8 last year, Mr Walsh said: ‘I have indicated that I’m clearly getting closer to retirement… the board has been working for some time, as you would expect, on succession planning.’
He said he planned to retire before his 60th birthday on October 25, 2021, adding: ‘I still love what I do, but my intention is to be retired within the next two years.’
Last March, he was handed up to £2.1million worth of shares as part of IAG’s bonus scheme and performance share plan. Mr Walsh was paid £3million in 2018.
Mr Walsh will be replaced by Luis Gallego (above), currently the boss of Spanish division Iberia
The man who presided over British Airways’ decline steps down: Airline owner’s chief executive Willie ‘The Slasher’ Walsh who oversaw £121m industrial dispute, IT catastrophes and Covid
Willie Walsh, 58, first joined the aviation field in 1979, when at the age of 17 he became a trainee pilot for Irish flag carrier Aer Lingus.
He completed a Master’s degree in management and business administration at Trinity College, Dublin while in this role, before advancing to become a Boeing 737 captain.
Mr Walsh then joined company management and held positions including chief executive for then-company subsidiary Futura from 1998 to 2000.
In 2000, he returned to Aer Lingus as Chief Operating Officer and rose to CEO, succeeding Michael Foley, a year later.
Throughout his time as CEO, Mr Walsh reconfigured Aer Lingus as a budget airline – removing short-haul Business Class options and axing around 2,500 jobs in a time of financial instability. The move earned him the nickname ‘Slasher.’
Willie Walsh, 58, first joined the aviation field in 1979, when at the age of 17 he became a trainee pilot for Irish flag carrier Aer Lingus
He resigned from the company in January 2005, and briefly worked for Virgin Atlantic before joining British Airways in May.
Mr Walsh became chief executive of the airline that October, succeeding Rod Eddington.
The former pilot presided over BA until 2011, a turbulent time for the airline industry as it dealt with continued fallout from 9/11 and the financial crisis.
This period saw several BA disasters, including an IT shutdown in 2017 which left 75,000 bank holiday passengers stranded, and a bitter dispute with pilots’ pay which brought huge disruption to passengers in September last year.
The dispute saw 3,000 pilots go on strike, causing sweeping cancellations and costing the airline £121million in one of the most damaging periods in the airline’s 100-year history.
The industrial action came a year after hackers stole the personal data of half-a-million BA customers in a breach which led to a £183million fine.
BA cut staff numbers by 6,000 between 2008 and 2010 with Mr Walsh calling striking cabin crew ‘dysfunctional’ and claiming some staff were ‘out of touch with reality’.
In 2011, British Airways joined forces with Spanish airline Iberia in a £5 billion merger to create IAG. Mr Walsh saw his salary rise from £735,000 to £825,000 following the merger and in 2015 it was reported that his total pay was almost £5million.
He was reported to have received pay and bonuses of just under £4million in 2017, up 60 per cent from £2.46million in 2016.
From his position at IAG, Walsh was said to hold much of the power for finances at BA – and some blamed him when a computer meltdown hit 75,000 air passengers in 2017.
Mr Walsh had insisted that rather than ‘cost-cutting’ the drastic measures taken under his tenure were more akin to ‘efficiency’.
He announced in January this year he would be stepping down from the role in March, but later opted to delay his retirement in order to guide the airline through the pandemic.