The boss of WizzAir has hit out at ‘socialists’ as he vowed to take his bumper bonus despite falling customer ratings and a plummeting share price.
CEO József Váradi earns more than £710,000 – and he’s due to receive a ‘one-off’ bonus worth 300 percent of that salary – in the region of £2.1 million.
And all in a year in which the airline was ranked worst for customer service for the third year in a row, as the stock price also tumbled to as low as 1,240p this morning – down from a peak of more than 2,500p in June and well below the CEO’s target of 12,000.
If he manages to turn his company’s fortunes around and reach 12,000p per share by 2028, he’s in line for a £100 million payout.
But despite the company’s woes, Mr Váradi – who rose to the head of the multi-million pound business after being inspired by the difficulties faced by his father amid the Hungarian uprising – is still determined to hit back at critics of his generous salary package.
‘Look at the United States… I don’t know what bonus Elon Musk took, but he took billions,’ he told City AM.
At the company’s recent AGM, almost one in five voted against Mr Váradi’s reward package – while more than a third voted against the wider renumeration policy.
Yet the rags to riches CEO declared the meeting an ‘absolute victory’, as he hit out at ‘socialist agencies’.
He told City AM: ‘I would say that it was an absolute victory because despite the socialist view imposed by the proxy agencies, actually we gained shareholder confidence, and shareholders with a comfortable margin voted in favour of the resolution’.
Few shareholders seem to share his view -opening on the stock market this morning, shares were down more than two percent.
But regardless of his salary controversies, there is no denying that Mr Váradi has shot to the forefront of aviation from an impoverished background which left his family struggling to put food on the table.
His father became involved in the 1956 Hungarian revolution before Mr Váradi’s birth, for which he was briefly jailed and then ostracised from stable work.
With his father only occasionally managing to find employment, Mr Váradi’s mother worked in a factory to help support the family, before their son won a scholarship to one of the country’s top universities.
Speaking previously about his family, Mr Váradi said his father ‘had a lot more potential than he was able to materialise given those circumstances, and maybe that kind of became a driver in me.
‘I felt that I ought to do something for the blood, to prove that we are worth more than what he ended up with.’
After graduating university, Mr Váradi went on to work at Procter and Gamble for ten years between 1991 and 2001.
He then joined Malév Hungarian Airlines, but just months later was plummeted into the spot light when the company’s board refused to extend its CEO’s contract.
While out drinking with colleagues, Mr Váradi received a phone call from the board’s chief demanding he meet him immediately.
After travelling to central Budapest, Mr Váradi was immediately offered the job to lead the company.
Despite being ‘half-drunk’ and initially declining to give an answer, the next morning he accepted the post and became the national carrier’s CEO until 2003.
But after the dismantling of the Soviet Union and the election a new centre-left government in Hungary in 2002, Mr Váradi spotted an opportunity.
Departing his position, he set up a new airline called Wizz Air, seeking to capitalise on the sudden freedoms of Hungarian citizens which came with joining the EU.
Since then, Mr Váradi has taken generous salaries and bonuses as he built the firm into the most-used low cost, short haul carrier in much of Europe.
Despite the firm’s success, the last few years have been tough going for the CEO.
The pandemic led to the grounding of almost all aircraft around the world, and Mr Váradi took drastic measures and laid off 1,000 crew members – or around 20 percent of its workforce.
The Hungarian Revolution of 1956 was a ten-day uprising against the government of the Hungarian People’s Republic.
Many Hungarians were angry at the nation’s ongoing subordination to the Soviet Union.
It began on 23 October 1956 in Budapest when 20,000 people, led by students, protested outside Parliament against the USSR’s geopolitical domination of Hungary.
When some students were detained by security guards, several others attempting to secure their release were fatally shot by police.
After five days of fighting and clashes between armed militias and authorities, a new government was put in place, prompting several days of peace.
But after an invasion by Soviet troops at the start of November, another five days of fierce fighting broke out.
The Soviets quashed the revolution within days, with the very last holdouts admitting defeat on November 11.
Around 2,500 Hungarians were killed and another 20,000 wounded during the violence.
Four years later, he has now admitted the cull ‘dented morale’ at Wizz Air after her looked as the pandemic as purely a ‘financial issue’.
As well as the impact of Covid on the aerospace industry, the company has faced major issues with its engines, which has impacted on customer capacity.
Aerospace manufacturer Pratt & Whitney began recalling thousands of its geared turbofan engines last year amid concerns over contaminated metal parts.
Five months ago, Mr Váradi warned that engine problems could continue to affect the Hungarian firm for at least two years.
But although the matter has forced Wizz Air to temporarily ground some planes, it has still flown 62.1 million people on a 12-month rolling basis, a 9.6 per cent year-on-year jump.
Yet with the continued war in Ukraine and deepening conflict in the Middle East, Wizz Air could have serious issues replicating those figures if many of their usual routes have to be reconsidered.
Wizz Air was also ranked the worst airline for customer service for the third year in a row by Which? this summer – although this is another finding Mr Váradi takes issue with.
‘We think it’s completely unfair. I mean, we looked into the methodology… the sample size and the representation of the sample,’ he said.
‘We have been making huge investments in the company as well as in the UK in particular. I mean if you just look at the UK, I think the average age of the UK [aircraft] fleet is one year.’
The CEO has also been accused of pushing a culture in which pilots are encouraged to fly extra shifts despite feeling ‘fatigued’.
Yet Mr Váradi himself maintains huge popularity within the company – at last week’s AGM, more 99.7 percent of attendees voted in favour of re-electing him as a director.