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Amid Crisis Induced Pay Cuts, Ryanair CEO Bonus Challenged

Amid Crisis Induced Pay Cuts, Ryanair CEO Bonus Challenged
Investors and shareholders reacted critically to a proposal by Ryanair boss Michael O’Leary for a 458,000 euro ($540,600) annual bonus with an influential investor advisory firm calling on the shareholders of the company to oppose the proposed package when the proposal goes to vote in a non-binding vote later this month.
The pay award for the financial year ended in March “raises concerns”, said proxy advisor Institutional Shareholder Services (ISS), and added that it was hard to justify the bonus hen the airline and the entire airline industry has been severely hit by the novel coronavirus pandemic.
This issue was reported previously by the Financial Times. No comments on the issue was available from Ryanair.
Amid the raging pandemic, there is greater scrutiny of pays and salaries in companies that have taken government aid or have cut jobs because of the pandemic crisis. On an earlier occasion, British Airways owner IAG’s 883,000 pound ($1.17 million) send-off for retiring CEO Willie Walsh was also recommended against by ISS,
Both IAG and Ryanair have used Britain’s Covid-19 Corporate Financing Facility (CCFF) and therefore a potential rejection of the proposed pays by the company’s investors during IAG general meetings of the IAG on September 8 or Ryanair on September 17 would be very embarrassing for the companies even though the votes are non-binding on the companies.
IAG awarded the bonus to Walsh based on his 2019 performance and his pay has been cut by 20 per cent since the pandemic crisis, said an IAG spokeswoman. “The worsening impact of COVID-19 on IAG has seen salary reductions for all senior management and the board,” she said.
British Airways has cut 12,000 jobs because of the crisis which has sparked union outrage. On the other hand, Ryanair had initially announced 3,000 jobs but later pay cuts.
The shareholders of IAG re also set to vote on a 2.75 billion euro rights issue by the company aimed at propping up its balance sheet that is already more robust than most of its peers’.
The pay for O’Leary has previously also drawn severe criticisms. In a shareholder vote last September, just 50.5 per cent of the shareholders of the company accepted his five-year bonus plan worth up to 100 million euros.
The CEO bonuses were described by British pilots’ union BALPA as “an insult to staff losing jobs” or taking pay cuts. “It beggars belief that airline bosses can shamelessly take government aid, slash jobs and then trouser huge bonuses,” General Secretary Brian Strutton said on Friday.
Analysts such as Daniel Roeska at Bernstein however were less reactive to the ISS. It was possible to create a defense for both pay awards arguing that those were a means of incentivizing better management performance which was all the more critical at this hour of the pandemic crisis, Roeska said.
“Next to Michael, Willie is probably the most successful European aviation leader we’ve had,” Roeska said, adding that neither airline had needed the CCFF financing to survive.

Christopher J. Mitchell

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