The proposed pay deal for the chief executive of Ryanair Michael O’Leary was opposed to by almost half of the shareholders of the company. O’Leary was proposed to be paid a compensation of €99m.
The company’s remuneration report was voted in favor by only 50.5 per cent of the shareholders of the company, said the Irish airline. For Ryanair, this vote of no-confidence could not have come at a worse time because the company is grappling with more strike action from pilots and is implementing retrenching plans.
The company would consult with its investors, said a spokesman after the vote. “Ryanair is, and will continue, to consult with its shareholders and we will report back to them over the coming year on how the board will adapt its decision-making to reflect their advice and input on all these topics,” he said.
A new contract with the company to continue as a chief executive till 2024 was signed by Mr O’Leary earlier this year. According to the contract, if O’Leary is able to doubles Ryanair’s profit or share price, he would be given a compensation of €99m from stock options.
The profit of the airline however dropped significantly in the last financial year which forced Mr O’Leary to announce the culling of between 500 and 700 jobs in the company.
The agreement with O’Leary to continue for another five years “gives certainty to our shareholders”, Ryanair said. The company also said that the remuneration being offered to O’Leary is “considerably lower than many other European airline chief executives”.
However at the annual general meeting (AGM) of the company, the remuneration report of the company was voted against by a significant number of the airline’s shareholders.
A row over pay and conditions is likely to result in more strikes by pilot this month. Similar agreement with respect to pensions, loss of licence insurance, maternity benefits allowances and pay, as exists for pilots in other airlines, is demanded by the pilots of Ryanair., said the pilots’ union Balpa.
The industrial action had not resulted in any flight cancellations which made Ryanair brand the earlier strikes as “pointless”.
The pay and the maximum annual bonus of O’Leary has been reduced by 50 per cent to €500,000 under the new agreement. 10 million share options was also granted to him.
These 10 million shares can be acquired by O’Leary for €11.12 and then he would be allowed to sell them at market price if the company’s profits hit €2bn in any year up to 2024 or the stock price of the company touched €21 for a period of 28 days from April next year. He would then pocket the difference.
The current price of Ryanair shares is €9.84. In the year to 31 March, the company’s pre-tax profit dropped to €948m compared to €1.6bn in the previous 12 months.
(Adapted from BBC.com)