BA could face city clash over director’s bonus
10.05.08
British Airways could face a clash with the City over payment of a bonus of up to £700,000 to its chief executive Willie Walsh, the Evening Standard reports. The airline is expected to announce record profits of around £870 million next Friday, seeing it hit the 10% margin needed to trigger bonuses for directors, managers and staff. Mr Walsh, who earns a basic salary of £700,000 a year, is entitled to a bonus of up to 100% if certain targets are met.
But with the memory of the Terminal 5 opening fiasco still fresh, the newspaper says that any decision by directors to 'pocket a bonus' is certain to cause a huge backlash, according to City analysts. One senior City figure told the Standard: ‘Insofar as the decision to open Terminal Five on 27 March was wrong, there should be consequences. The directors took the decisions and they were disastrous. BA is still in denial about just how bad the problem was, it was horrific. If the board do anything other than refuse to accept any bonuses they will look extremely foolish.’
The catastrophic opening of T5 just five days before the end of the financial year marred what was otherwise a successful 12 months for the airline, with Mr Walsh earning plaudits for cutting costs and resolving a potentially damaging row over the pension fund.
The bonus scheme depends on the airline reaching the minimum threshold of a 10% profit margin. If that is achieved - and City forecasts suggest BA will be very close to the target - Mr Walsh is entitled to a bonus of 45% of salary. Other targets for ‘customer recommendation,’ punctuality and employee involvement as well as ‘personal contribution against objectives’ could lift it to the maximum 100%.
A recommendation on the level of the bonus will be made by the board's remuneration committee. But the final decision will be taken by the full board, chaired by Martin Broughton, on Thursday. A 'BA source' told the Standard: ‘We expect the issue of the bonus to be cleared up by the time of the results on Friday. T5 will have to be taken into account but that was only in the last five days of a year.’
Add to: del.icio.us | Digg it | Newsvine | NowPublic | Reddit
