THE board of Virgin Australia faces a rebuke from minority shareholders over its executive pay after an influential adviser urged a no vote because of what it describes as ''very large'' short-term bonuses.
Despite Virgin posting a $23 million profit, CGI Glass Lewis has also recommended a vote against the remuneration report because of the high pay levels for the airline's chief executive, John Borghetti.
His total pay rose by 45 per cent to $4.07 million for the year to June. It included $1.29 million in base pay, $1.16 million in short-term cash bonuses and $1.37 million in long-term share-based payments.
CGI said Mr Borghetti's total pay was more than double the median of Virgin's market peers. It also pointed out that his short-term bonus was about three times higher than the median for his peers, and outpaced Virgin's ''value, sector and industry peers''.
''Given the … CEO's high remuneration levels, the lack of justification for such levels and the compounding effect high fixed remuneration has on incentive-based pay, we cannot recommend that shareholders support the remuneration report,'' CGI said.
The Australian Shareholders Association has also urged a vote against the airline's executive pay card because it believes their bonuses are excessive.
However, any protest vote at the annual meeting in Brisbane on Tuesday will be symbolic because Virgin's three largest shareholders - Richard Branson's Virgin Group, Air New Zealand and Etihad - are expected to support the remuneration report.
Another proxy adviser, ISS, has urged shareholders to support the remuneration report.
Last year about 16 per cent of votes were cast against Virgin's executive pay card. It was a sizeable no vote given that Virgin Group and Air New Zealand - which at the time held about 41 per cent of the shares between them - supported it. Last year, three proxy advisers, including CGI and ISS, urged a no vote.
This year, CGI has also urged its clients to vote against the re-election as a director of Robert Thomas because of what it described as an imbalance between Virgin's non-audit and audit fees.
Mr Thomas chairs the airline's audit committee.