British Airways' (BA) parent company is facing a shareholder pay revolt amid criticism of proposals for an "excessive" hike in executives' share awards despite racking up enormous losses during the pandemic.
Sky News has learnt that International Airlines Group (IAG) is braced for a substantial rebellion at its annual meeting next month after Glass Lewis, one of the major proxy voting agencies, recommended that investors vote against its pay policy.
The recommendation, which may be followed by Glass Lewis's peers, puts IAG on course to become the latest blue-chip London-listed company to be hit by a shareholder backlash over boardroom pay.
In recent weeks, Ocado, GSK and Pearson have seen substantial votes against remuneration resolutions.
Glass Lewis's report to clients said IAG's proposal to increase chief executive Luis Gallego's maximum share award under its restricted stock plan from 100pc of salary to 150pc was "misaligned with the stakeholder experience".
"We expect the [remuneration] committee to show restraint in its granting practices when a company has seen a steep decline in share price," the firm said.
"Further, we note that it is common practice for committees to reduce grant levels for share based incentive awards in such circumstances."
Investors generally expect restricted stock plans to be awarded at a 50% discount to the level of share awards granted under conventional long-term incentive plans.
While IAG adhered to this level of discount last year, it is now seeking to increase the RSP grant again.
IAG benefited from hundreds of millions of pounds of taxpayer support during the COVID-19 crisis, while it also suspended dividends and raised funds from the sale of new shares to investors.
The group, which also owns Aer Lingus and Iberia, has faced swingeing criticism for its approach to refunding customers whose travel plans were disrupted by the pandemic, and over broader customer service issues at BA.
Recent reports suggested that Sean Doyle, BA's relatively new chief executive, was under intense pressure to improve the carrier's performance, although he is unlikely to leave in the short term, according to industry executives.
IAG said Mr Gallego voluntarily forfeited a £900,000 bonus last year, and pointed out that the ratio between the pay of its chief executive and its average employee was among the lowest in the FTSE-100.
"IAG's chief executive has seen a significant remuneration reduction in the last two years," the company said.
"He did not receive his long-term incentive (2018 and 2019) and his 2020 bonus, [and he] decided to forego his £900,000 bonus in 2021 in addition to undertaking voluntary salary reductions in 2020 and 2021.
"The proposed amendment to his long term incentive plan, where shares vest in three years-time plus two years holding period, makes his award opportunity more competitive and aligns it with other IAG senior management."
The company added that these steps "ensure his future remuneration is in line with the group's performance in the long term".
"The award is subject to a final assessment and decision by the board in light of IAG's overall performance during the period."