Sunday Times obtains details of £10.4 million bonus scheme, in stages, for Heathrow execs if they get 3rd runway
It emerged on 16th May that Heathrow executives were in line for large bonuses, if they managed to get a 3rd runway. Now the Sunday Times has details. They say eight executives could share a £10 million bonus pool. It appears they have already achieved £414,000 of the bonus, by getting the Airports Commission to select Heathrow in July 2015. Details of the bonus scheme are that the sums increase, based on the success of the executives’ lobbying. The next bonus payout would be, between the eight, £622,000 if they “create a climate of political support that enables the government to give its backing to expansion”. ie. if there is a government announcement this summer or autumn. Then they would get £829,000 if Heathrow is judged to be “on course to win planning approval” for its runway. There would be another £829,000 of the bonus if Heathrow can get the CAA to allow Heathrow much higher landing charges in future, to pay for the runway (the CAA controls its charges). The whole £10.4 million bonus is the airport’s “share in success” incentive, and includes other measures not related to a 3rd runway. It is to be paid out in 2019. The existence of the bonus scheme was initially denied by the airport. But it creates strong personal gain motives for senior staff, in pushing through the runway, regardless of its adverse impacts.
Heathrow bosses eye £10m bonus pool
Payouts will flow if airport chiefs create ‘right climate’ for third runway
By John Collingridge (Sunday Times)
May 22 2016
Full Sunday Times article at
Eight Heathrow executives could share a £10m bonus pool, with part of the payout dependent on their creating the right “political climate” to approve a third runway.
Senior executives at the airport look to have already earned £414,000 of the bonus after winning over the independent Airports Commission.
Heathrow, which is largely owned by overseas funds, including those of Qatar and Singapore, has demanded a 20-year deal on landing charges from the watchdog [CAA] in return for building a third runway. It argues that it needs a fundamental review of the regulatory regime if it is to bear the huge risks of expansion.
The CAA recently warned the government that the winning airport’s shareholders may try to move the goalposts to extract better profits once ministers have ruled.
Full Sunday Times article at
Heathrow senior executives would get large bonuses if they manage to get 3rd runway
The Guardian has revealed that Heathrow’s annual report (December 2015) show that its top executives would benefit personally if the airport gets a 3rd runway. This is despite past denials that there were any financial incentives, not least when senior executives at Gatwick were found in February to have huge financial incentives if they manage to get a 2nd runway. Heathrow Airport Holdings Ltd states: “During the year a new bonus scheme was launched based on EBITDA, passenger service (as measured by independent ASQ – Airport Service Quality – scores) and airport expansion over the Q6 period….” [Q6 is the 5 year regulatory period 2014 – 2019]. A Heathrow spokesman said the runway bonus would only be a small part of a payout for meeting the strategic requirements of the business, hitting the profit targets etc. CEO John Holland-Kaye earned £2.06m last year, more than doubling his basic salary of £885,000. However, he could add even more to that should a 3rd runway be approved. The annual report states that while a bonus scheme linked to expansion was launched in 2015, “as the performance in respect of this scheme is so uncertain at this stage, no value in relation to these awards is included” in his 2015 earnings package. The Guardian says John Holland-Kaye is believed to be the architect of the new bonus scheme. The airport cut its wider wage bill by cutting 333 jobs last year (6,714 compared to 7,047 in 2014), but directors’ pay rose. Directors’ remuneration was up by £366,000 in 2015, to £3,555,000 from £3,189,000 in 2014).
Anger at revelation that Gatwick bosses to personally profit (millions of £s) if 2nd runway allowed
The Gatwick Area Conservation Campaign (GACC) has expressed anger at the revelation in the Sunday Times that Gatwick bosses are set to benefit personally by several million pounds if permission is given for a 2nd runway. GACC says a 2nd runway would bring misery to tens of thousands of people. There would be three times as many people affected by serious amounts of aircraft noise, and new flight paths over peaceful areas. About 50,000 people would suffer from worse air quality. A new runway would mean traffic jams on motorways and local roads, overcrowding on the trains and an influx of new workers with a need to build 40,000 new houses on green fields. But with all these negative impacts on ordinary people, Gatwick bosses would walk away with huge bonuses. GACC chairman, Brendon Sewill, commented: “Until now Gatwick Airport Ltd have tried to persuade the public that a 2nd runway would be in the national interest. Now the cat is out of the bag! There is no real need for a new runway at Gatwick.” GACC will be investigating how far these new bonus payments will be subject to the normal full 45% rate of income tax. Despite making large profits, Gatwick Airport has paid no corporation tax since being bought by GIP due to tax fiddles similar to those operated by Starbucks or Google.
Top Gatwick bosses stand to make personal fortunes if airport price raised by 2nd runway
The Sunday Times has found that several of Gatwick’s senior bosses are signed up to a bonus scheme that should pay out handsomely if the airport is sold. In small print in Gatwick’s 2011 accounts the bonuses of “certain members” of its board are directly linked to the amount GIP gets from sale of the airport. It has long been suspected that Stewart Wingate, Nick Dunn (and others?) would stand to gain significantly, themselves, if they could raise the value of the airport by getting a 2nd runway. Now the disclosure has proved it. The cap on how much they could make is not revealed. Gatwick lent the executives £2.8m to buy into the share scheme, with the interest-free loans repayable once they sell their shares. GIP owns 42% of the airport, with much of the rest held by investors from Abu Dhabi, California, Korea and Australia. Gatwick have been doing all they can to block a Heathrow runway, to get their own. They are also doing all they can to increase the maximum number of flights per hour through flight path changes – again to raise the airport’s price. GIP bought Gatwick for £1.5 billion in 2009, and has just sold London City airport for almost x3 what they paid for it – and almost x32 its annual underlying profits.