Here's Why We Think Wizz Air Holdings Plc's (LON:WIZZ) CEO Compensation Looks Fair for the time being

Despite positive share price growth of 19% for Wizz Air Holdings Plc (LON:WIZZ) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 27 July 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Wizz Air Holdings

How Does Total Compensation For József Váradi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Wizz Air Holdings Plc has a market capitalization of UK£4.4b, and reported total annual CEO compensation of €1.6m for the year to March 2021. Notably, that's a decrease of 39% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at €518k.

On examining similar-sized companies in the industry with market capitalizations between UK£2.9b and UK£8.8b, we discovered that the median CEO total compensation of that group was €1.7m. From this we gather that József Váradi is paid around the median for CEOs in the industry. What's more, József Váradi holds UK£65m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	€518k	€656k	32%
Other	€1.1m	€2.0m	68%
Total Compensation	€1.6m	€2.6m	100%

Talking in terms of the industry, salary represented approximately 53% of total compensation out of all the companies we analyzed, while other remuneration made up 47% of the pie. It's interesting to note that Wizz Air Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Wizz Air Holdings Plc's Growth Numbers

Wizz Air Holdings Plc has reduced its earnings per share by 80% a year over the last three years. In the last year, its revenue is down 73%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Wizz Air Holdings Plc Been A Good Investment?

With a total shareholder return of 19% over three years, Wizz Air Holdings Plc shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Wizz Air Holdings (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Wizz Air Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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