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EasyJet chairman hits back at attacks by company’s founder

Sir Michael Rake defends the airline following a number of ‘increasingly personal’ broadsides from Stelios Haji-loannou

Sir Michael Rake, the chairman of the airline easyJet, has reacted to the “increasingly personal” broadsides being aimed at the company by founder Sir Stelios Haji-Ioannou with an impassioned defence of the firm’s policies.

Haji-Ioannou, whose family holds a 38% stake in easyJet, has been irking easyJet directors with frequent attacks on the number of planes the airline has ordered and what he said were “phoney” targets underpinning executive incentive schemes. Having accused directors of treating the company as their “personal piggy bank”, Haji-Ioannou has tabled a motion to oppose a pay deal potentially granting 10 executives millions of pounds in shares.

In a speech at the airline’s investor day in the City on Tuesday, Rake attempted to hit back.

“Stelios and easyGroup have chosen to continuously attack the company in various different ways and increasingly personalise those attacks on individuals in the company,” he said. “We have at all times refrained from entering that level of debate … The inaccuracy which has been put about that I really need to clarify is in relation to shares issued by the company. The £7m of shares have been awarded to the top 10 management people and will only vest in full in 2015 if the company achieves 13% ROCE [return on capital employed] over those three years which is a very significant challenge”.

Rake said there had been references to “£180m of shares” having been issued over the past 10 years, and added the company would “publish detailed information showing that 75% of these shares were pre-flotation shares that were allocated whilst Stelios was chairman.”

Haji-Ioannou’s broad critique that easyJet is using a flattering calculation of return on capital employed – the benchmark proposed for the current contentious long-term incentive plan – pushed Rake into promising investors that the airline will publish three different ways of making the complex calculation. Easyjet has said that it “outperformed most of its traditional competitors” on the three measures.

That move prompted ridicule from Haji-Ioannou, who told the Guardian: “I have a message for Mike Rake, as the only British accountant with a polo farm in Argentina. He needs to go back to school and remind himself of the following: capital employed equals equity plus debt plus capitalised leases. His old method was just phoney and it creates a moral hazard. Now he says he will use three methods. One last thing: I will never again meet this man in a room for a chit-chat because he rewrites history.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds