Comment by Stelios on the resignation of Sir David Michels from the board of easyJet
Posted: 23 May 2011
Commenting on today's announcement that Sir David Michels' will step down from the easyJet board, Sir Stelios Haji-Ioannou, the founder of easyJet and the airline's largest shareholder, said:
"I believe that David Michels has done the right thing by resigning from the board of easyJet today. However, I cannot see the benefits of Sir David staying on for an additional six months given the fact that he has no long term links with the company.
"It is my view that board members who have "checked out" of a company should not be involved in long term strategic decisions such as aircraft purchases.
Sir David's tenure at the company can be summarised as follows:
- He joined as a Senior Independent Non-Executive Director on 6 March 2006.
- The average share price for the three months leading up to Sir David's appointment was £3.80; today the share price is £3.44, 10% down in 5 years.
- During his tenure, the board paid zero dividends to shareholders; in contrast, Ryanair has returned to its shareholders €846 million in share buy-backs and dividends.
- Today, easyJet's market capitalization is the same as the cash pile which suggests the market does not value the rest of the business.
- The fleet size when Sir David joined was 110 Aircraft.
- The fleet size today currently stands at 191 Aircraft and will reach 204 aircraft by the end of the year. i.e. the fleet has doubled but the share price has gone down.
- During Sir David's tenure, the board purchased 94 Airbus aircraft at an exorbitant total cost. The cost of each aircraft has been studiously kept a secret from the shareholders.
- The return to shareholders on this investment in 94 aircraft is nil to negative.
- Sir David approved Andrew Harrison's remuneration package for £1m for the three month period April – June 2010; this package was rejected by shareholders at easyJet's AGM on 18 February 2011.
- Along with other members of the remuneration committee, Sir David failed to predict that putting a CEO on a golden parachute not linked to performance would lead to easyJet's huge operational failures of the summer of 2010.
- Sir David and the easyJet board approved the purchase of a further 15 airbus aircraft on the 4 January 2011.
- On the 20 January 2011 the company issued a profit warning. Since then the share price has been at 20% discount compared to the average of the 3 months up to 4 January 2011.
- Sir David should have, following investigation, foreseen the profit warning on 4 January 2011 and not ordered the 15 aircraft."