People

The People Running This Company

Governance grade: C+. Avation is a founder-led aircraft lessor where the Executive Chairman owns ~19% of the company and has refused a cash bonus for five straight years — strong economic alignment. But the same founder sits on his own Remuneration Committee, the board has only two genuinely independent directors out of five, and the company has explicitly opted out of full UK Corporate Governance Code compliance via the LSE's standard-listing segment. Skin-in-the-game is real; the checks-and-balances around it are thin.

1. The People Running This Company

The board is small, aviation-heavy, and dominated by a single founder. The deepest external talent recently joined: Peter Davis (ex-BOC Aviation Treasurer) was appointed in February 2026 — a credible upgrade for a leasing company whose central skill is debt funding.

The capability story is credible. Chatfield and Shelton sold a previous aviation business (Skywest) to a strategic acquirer at scale — that is the playbook the activist Rangeley/Raper bought into in 2023. Mahoney brings 23 years of Airbus relationships; Sharples brings airframer governance and aircraft engineering depth. The Davis hire signals that the board recognised its weakest link was treasury/funding sophistication and addressed it.

The succession story is fragile. Chatfield is the only executive with deep operational tenure at Avation. Shelton is competent but new to the board (June 2024) and his title is "Executive Director" — there is no named CEO succession plan. CFO Andrew Hiscock is not on the board. For a company whose entire equity story depends on one man's negotiating skills with airlines and lenders, the bench is thin.

2. What They Get Paid

Pay is modest in absolute terms and declining for the CEO — a rare and shareholder-friendly pattern.

Three things stand out.

First, the CEO has taken zero cash bonus in every one of the last five years. The proxy explicitly states "Annual bonus pay-out (as % of maximum): 0% / 0% / 0% / 0% / 0%". For a founder-CEO, this is unusual self-restraint.

Second, total executive remuneration ($1.5M) is roughly 1.4% of FY25 revenue ($110M) and tiny relative to the company's $1.1B asset base. A US-listed lessor of similar size would typically pay its CEO 5-10x more. Pay is not the leak.

Third, the long-term incentive design has a hole: share warrants vest purely on time, with no performance hurdle. The proxy states "There are no performance conditions that need to be met before warrants can be exercised." The committee asserts goals exist, but they're discretionary and not disclosed. Chatfield exercised 1.2M warrants in FY25 for a £0.4M gain on a 2020-vintage grant — the gain came from the share rerating, not from anything tied to a measurable target.

3. Are They Aligned?

This is where Avation looks most attractive on paper and where the analysis splits.

Ownership and control

Chatfield's 18.6% is the largest single block. The activist Rangeley Capital LLC / Jeremy Raper, which had assembled ~25% by Nov 2023 (acquired from forced seller Oceanwood at 79p — well below market), has progressively reduced the position to ~9-11% as buybacks have rerated the stock. The activist did its job: pushed for a value-realising agenda, watched the share price double from the entry point, and is now harvesting. Their continued presence on the register remains a positive governance check on management.

Insider behaviour and capital allocation

Capital allocation in FY25 and HY26 has been emphatically pro-shareholder: 8.36M shares repurchased in FY25 at 138-150p, plus another ~7M+ shares (~$10M) in HY26, while the stock trades at roughly half stated NAV (£2.74 NAV vs ~137p market). Buying back at 50% of book is per-share value-accretive math. The dividend is a token 0.5 pence.

Insider open-market buying is real but small: Mark Shelton bought 1,340 shares in July 2025 at 148p (~£2k). Director shareholdings barely changed YoY at the AGM disclosure date — Chatfield's deemed interest rose only 150,999 shares (mostly from a warrant exercise net of share count).

Skin-in-the-game scorecard

Related-party flags

Chatfield's share warrants are granted to him personally and then assigned to Epsom Assets Limited, a private vehicle he beneficially owns. Shelton's warrants are similarly assigned to PPT Consulting Pte. Ltd. Both arrangements are disclosed; both are common UK/Singapore tax-planning structures. There is no evidence of self-dealing in transactions, leases, or asset sales. The auditor (EY Dublin) has issued clean opinions; the company secretary function is split between two named individuals.

4. Board Quality

What works. Aviation depth is exceptional for a sub-$200M market-cap company: a former Skywest CEO, a 23-year Airbus executive, an ex-Airbus Helicopters Asia CEO, and now a 14-year BOC Aviation treasurer. There is nothing missing on the operational side.

What does not work.

• Only two genuinely independent directors out of five (Fisher, Sharples). Mahoney was an executive until 2022 — under the UK Corporate Governance Code's nine-year rule he counts as non-independent. Davis (Feb 2026) restores a third, but he is brand new.
• Audit Committee is half non-board members (Stephen Fisher and Derek Sharples are joined by Iain Cawte and the executive director Mark Shelton). Best practice is 100% independent NEDs, with no executives.
• Remuneration Committee includes the CEO whose pay it sets. Defensible by tone (pay is modest), indefensible by structure.
• The company sits in the LSE's standard-listing "Equity Share (Transition) segment" and explicitly states it "is not required to comply with the [UK Corporate Governance] Code in full." This is the regulatory reality of the company's chosen listing tier — investors are buying disclosed governance dilution.

5. The Verdict

Most likely upgrade trigger: a re-balancing of the board to a majority of independent directors (Davis is the first step), removal of the CEO from the Remuneration Committee, and addition of a performance hurdle to the warrant scheme. Any one of these is achievable and would shift the grade toward B+.

Most likely downgrade trigger: equity issuance below NAV (the AGM resolutions enable it), a related-party transaction involving Epsom Assets, or any signal that Chatfield is monetising his stake while the discount remains wide. None of those have happened — but the structure to do them exists.

For a deep-value, sub-$200M-cap aircraft lessor with an entrenched founder, this is roughly the highest governance score the structure can reasonably support. The trade is to back the alignment over the architecture.