IAG, the parent group of Iberia, Vueling, and British Airways, will hold its ordinary general assembly on the 15th and 16th of June. The meeting will proceed in both the first and second calls, with voting scheduled to take place. The board is reviewing a proposal from the CEO to adjust the compensation policy.
The package would temporarily raise the cap on base salary increases to 150% and expand the five-year long-term incentive plan known as the RSP for executive directors. These changes would allow shares to be transferred to Gallego, bringing the maximum value to roughly £820,000 (about €950,134) up to 1.2 million pounds (about €1.4 million). Presently, roughly 70% of a CEO’s compensation is linked to performance-based rewards.
The RSP would become effective only after a five-year period, contingent on the manager remaining with the Group and on an assessment by the board remuneration committee, which takes into account the Group’s performance during that interval.
When the long-term incentive is structured as a Performance Stock Plan (PSP), the opportunity can reach as high as 200% of the base salary for managers.
Under the new RSP framework, the IAG CEO would receive a level equal to 100%, effectively a 50% reduction, while other senior executives would see the base salary-based cap lifted to 150%, equivalent to a 25% reduction. In aggregate, this aligns the CEO’s package with the broader cohort of Group executives at the 150% level.
“A basic stance” in a competitive foreign market
The IAG Remuneration Committee frames this adjustment as a basic response to rising opportunities for talent abroad. The committee notes that the CEO’s current pay structure is increasingly at a disadvantage relative to peers inside and outside the aviation sector.
Since the onset of the pandemic, the Group has seen significant talent departures and the transfer of several high-responsibility roles from adjacent industries to competing firms. The Committee stressed that these shifts underscore the difficulties in retaining top talent essential for IAG’s transformation.
In addition, the agenda includes votes on re-election. Louis Gallego stands for re-election as CEO, with Javier Ferrán up for a renewed term as chairman of the holding company, along with votes on other independent non-executive directors and their remuneration policies.
A notable gesture: foregoing a large payout
Gallego chose not to collect the substantial bonus that had been set aside for him the previous year. He voluntarily relinquished around £900,000 (about €1.07 million). Earlier, in 2014, he similarly waived a €632,000 bonus tied to the 2013 fiscal year when he served as Iberia’s CEO. Additionally, stock incentives for 2018 and 2019 were not awarded to him.
The airline holding company’s lead director informed the board that he did not wish to be considered for the 2021 Annual Incentive Plan. This stance reflects a desire to align his interests with the company’s situation as it prepared for a recovery from the pandemic and the related travel restrictions that affected international mobility.
In the first quarter, IAG recorded a net loss of €787 million after tax and exceptional items, a 26.7% drop from the same period a year earlier. From January through March, the Group’s total revenue reached €3,435 million, compared with €968 million in the prior year’s first quarter.