Easyjet has joined the ‘remuneration-report hall of shame’ following yesterday’s AGM when 28% of shareholders opposed its remuneration report. The revolt puts the low cost airline in the company of  Shell, Grainger, Punch Taverns and  who have all suffered remuneration defeats at the ballot box.

The result probably comes as no surprise given the sharply increased focus on executive pay and bonuses, but  the ongoing public dispute between Sir Stelios Haji-Ioannou, founder and a major shareholder of the company, and the rest of the Board members over the company’s capacity growth will have played a part.

Although the conflict was reported as resolved, there have been some high-profile departures from the Board and the management team during in the last year, including the Chairman and the Finance Director. In May 2009, in the company adopted new termination provisions, to ‘facilitate retention and a period of continuity’, for the CEO, Andrew Harrison. The arrangements entitled him to receive up to £1,220,000 (approximately 206% of his 2009 salary), if he resigned after 31 March 2010.

Apart from the payment in lieu of notice in respect of the full 12 month notice period with no obligation to mitigate the  payment, Harrison was also entitled to receive a pro-rated bonus and he would be considered as a good leaver for the LTIP award.

Such generosity with shareholders' funds has not gone unnoticed as it appears the "retention tool" backfired completely. In December 2009, Harrison formally announced his resignation, effective 30 June 2010 having reportedly been been planning to leave the airline as early as in May 2009. Easyjet's acting chairman at the time of the deal, Sir David Michels, has stated that the situation was "complex" and that it was "not just a disagreement about money".

Irrespective of the intentions, a substantial number of shareholders disagreedwith the retention strategy. Stelios Haji-Ioannou, the 26% shareholder, is understood not to have attended or voted at the meeting, so it is possible that the majority of the independent shareholders voted against the remuneration report. The only significant shareholder that is known to have supported the resolution is Standard Life, with an 8% stake. They have, however, criticized ‘the lack of consultation ahead of the decision’.

Interestingly, Sir David Michels also serves as a Deputy Chairman of Marks & Spencer, another company which agreed controversial payments – it’s £15m ‘golden hello’ for the new CEO, Marc Bolland may cause yet another shareholder rebellion at the M&S AGM this July.