Stelios in EasyJet board battle
Published: 06:10 - 15/11/08
Sir Stelios Haji-Ioannou, one of the most flamboyant European entrepreneurs of the past decade, is seeking to wrest back influence over EasyJet amid a growing boardroom dispute at the low-cost airline.
Sir Stelios has fallen out with the EasyJet board over the airline's strategic direction and is pushing the company, his most successful creation, to be much more cautious in the face of the growing crisis in the global airline industry.
He is challenging the airline's strategy of ambitious growth supported by the acquisition of hundreds of cheap Airbus aircraft.
The company's shares fell by almost 5 per cent as investors worried about divisions at the top of the company. To push his case, Sir Stelios has increased his stake in the airline in order to appoint two more directors to the board.
He has raised his holding from 15.6 to 26.9 per cent via the transfer of the legal interest in his sister's 11.3 per cent stake to EasyGroup Holdings, his Cayman Islands-registered company
With more than 25 per cent, Sir Stelios has the right under EasyJet's articles of association to appoint the new directors,giving him control of a quarter of the board.
He has also reminded EasyJet directors of his right to appoint himself chairman should they seek to block the move.
In a statement, EasyJet said that the board had already sought to adopt a "more cautious approach to fleet growth" given the downturn in the market and had taken steps to conserve cash, reduce growth plans and dispose of surplus aircraft.
It said Sir Stelios had indicated, however, that he wished the company "further to restrict future aircraft orders and to make future dividend payments "in conjunction with a cessation or slowing of growth".
EasyJet, in common with Ryanair, its fast-growing Irish rival, has never paid dividends in the belief that the group was a growth stock that rewarded investors through capital appreciation from a rising share price.
Sir Stelios's surprise intervention indicates he might believe the era of such growth is over.
In an e-mailed statement, he said: "I am merely applying my rights under the articles of association of the company to protect my investment in EasyJet.
"I did not request a dividend now. I think the company should plan to pay one in 2011 if the markets allow."
Sir Stelios's 15.6 per cent stake is valued at £175m (€204m).
EasyJet's founder risks grounding the share price
By Andrew Hill
nov 14 2008 15:30
Sir Stelios Haji-Ioannou must have had a brain transplant. In a week when scientists showed that entrepreneurs' grey matter was more active than that of ordinary managers when it came to risk-taking, how else can one explain the ebullient EasyJet founder's sudden outbreak of caution?
According to the board, Sir Stelios wants to limit the airline's growth and fleet expansion. He's seeking - of all things - a commitment to a maiden dividend by 2011, just as other companies are suspending pay-outs to shareholders or cancelling them altogether. All it takes now is for the serial entrepreneur to call for a pair of slippers and an EasyChair and the pioneering brain-switch with a risk-averse middle manager can be declared a success.
ln fact, in trying to protect his investment, Sir Stelios is not sitting back; he's going on the offensive. Having added his sister's shares to the stake he holds through his private vehicle EasyGroup, he can now appoint two directors. He has reiterated his right to become chairman. The tactics aren't new. But the last time EasyJet's shares dipped to their low-point, in July 2004, he said he would only take the chair "in extreme circumstances".
Just how extreme the circumstances are for Sir Stelios and EasyGroup is hard to judge. His cruise, hotel and car rental operations must be vulnerable to the consumer downturn, no matter how many EasyPizzas he sells. But it is hard to see how a running spat between EasyJet's board and its founder and major shareholder is going to enhance the value of his stake in the airline. EasyGroup is already at legal loggerheads with EasyJet over the airline's use of the brand. Boardroom tension will complicate any effort to find a replacement chairman (other than Sir Stelios himself), when Sir Colin Chandler turns 70 next autumn. The fact that the stock dropped nearly 5 per cent on Friday, against the run of the market, indicates investors think the outcome must be slower growth or continued uncertainty.
When, in 2002, Sir Stelios announced his intention to step down as EasyJet chairman, he made much of the signal it sent about the "maturity" of the young company. "The history of the City is littered with entrepreneurs who held on to their creations for too long, failing to recognise the changing needs of the company, its business and its shareholders," he said at the time.
If he wishes to reverse that commitment, he has, in theory, one other extreme measure at his disposal. He could take the company private, something he was rumoured to be considering in 2004. That would be the ultimate means of protecting value for the family shareholders. It would release fellow investors from a messy and possibly intractable situation. Unfortunately, a buy-out requires one product unavailable to anyone in this market, even Sir Stelios: easy money
The Financial Times
Published: 06:10 - 15/11/08
Sir Stelios Haji-Ioannou, one of the most flamboyant European entrepreneurs of the past decade, is seeking to wrest back influence over EasyJet amid a growing boardroom dispute at the low-cost airline.
Sir Stelios has fallen out with the EasyJet board over the airline's strategic direction and is pushing the company, his most successful creation, to be much more cautious in the face of the growing crisis in the global airline industry.
He is challenging the airline's strategy of ambitious growth supported by the acquisition of hundreds of cheap Airbus aircraft.
The company's shares fell by almost 5 per cent as investors worried about divisions at the top of the company. To push his case, Sir Stelios has increased his stake in the airline in order to appoint two more directors to the board.
He has raised his holding from 15.6 to 26.9 per cent via the transfer of the legal interest in his sister's 11.3 per cent stake to EasyGroup Holdings, his Cayman Islands-registered company
With more than 25 per cent, Sir Stelios has the right under EasyJet's articles of association to appoint the new directors,giving him control of a quarter of the board.
He has also reminded EasyJet directors of his right to appoint himself chairman should they seek to block the move.
In a statement, EasyJet said that the board had already sought to adopt a "more cautious approach to fleet growth" given the downturn in the market and had taken steps to conserve cash, reduce growth plans and dispose of surplus aircraft.
It said Sir Stelios had indicated, however, that he wished the company "further to restrict future aircraft orders and to make future dividend payments "in conjunction with a cessation or slowing of growth".
EasyJet, in common with Ryanair, its fast-growing Irish rival, has never paid dividends in the belief that the group was a growth stock that rewarded investors through capital appreciation from a rising share price.
Sir Stelios's surprise intervention indicates he might believe the era of such growth is over.
In an e-mailed statement, he said: "I am merely applying my rights under the articles of association of the company to protect my investment in EasyJet.
"I did not request a dividend now. I think the company should plan to pay one in 2011 if the markets allow."
Sir Stelios's 15.6 per cent stake is valued at £175m (€204m).
EasyJet's founder risks grounding the share price
By Andrew Hill
nov 14 2008 15:30
Sir Stelios Haji-Ioannou must have had a brain transplant. In a week when scientists showed that entrepreneurs' grey matter was more active than that of ordinary managers when it came to risk-taking, how else can one explain the ebullient EasyJet founder's sudden outbreak of caution?
According to the board, Sir Stelios wants to limit the airline's growth and fleet expansion. He's seeking - of all things - a commitment to a maiden dividend by 2011, just as other companies are suspending pay-outs to shareholders or cancelling them altogether. All it takes now is for the serial entrepreneur to call for a pair of slippers and an EasyChair and the pioneering brain-switch with a risk-averse middle manager can be declared a success.
ln fact, in trying to protect his investment, Sir Stelios is not sitting back; he's going on the offensive. Having added his sister's shares to the stake he holds through his private vehicle EasyGroup, he can now appoint two directors. He has reiterated his right to become chairman. The tactics aren't new. But the last time EasyJet's shares dipped to their low-point, in July 2004, he said he would only take the chair "in extreme circumstances".
Just how extreme the circumstances are for Sir Stelios and EasyGroup is hard to judge. His cruise, hotel and car rental operations must be vulnerable to the consumer downturn, no matter how many EasyPizzas he sells. But it is hard to see how a running spat between EasyJet's board and its founder and major shareholder is going to enhance the value of his stake in the airline. EasyGroup is already at legal loggerheads with EasyJet over the airline's use of the brand. Boardroom tension will complicate any effort to find a replacement chairman (other than Sir Stelios himself), when Sir Colin Chandler turns 70 next autumn. The fact that the stock dropped nearly 5 per cent on Friday, against the run of the market, indicates investors think the outcome must be slower growth or continued uncertainty.
When, in 2002, Sir Stelios announced his intention to step down as EasyJet chairman, he made much of the signal it sent about the "maturity" of the young company. "The history of the City is littered with entrepreneurs who held on to their creations for too long, failing to recognise the changing needs of the company, its business and its shareholders," he said at the time.
If he wishes to reverse that commitment, he has, in theory, one other extreme measure at his disposal. He could take the company private, something he was rumoured to be considering in 2004. That would be the ultimate means of protecting value for the family shareholders. It would release fellow investors from a messy and possibly intractable situation. Unfortunately, a buy-out requires one product unavailable to anyone in this market, even Sir Stelios: easy money
The Financial Times
