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Ryanair shareholders leery of backing executive incentives

Some of the ostensibly independent directors on the Ryanair board have been reappointed with less than wholehearted support from the shareholders

We are Ryanair. No one likes us. We don't care.

Ryanair Holdings PLC (LON:RYA) chief executive Michael O’Leary seems to enjoy controversy so he’ll probably love the fact that the company’s shareholders are revolting.

Shareholders were asked to vote on the board’s remuneration report and barely half of the votes cast were in favour of it.

Votes on remuneration are only advisory under Britain’s bizarre company law so even if the votes against the report had exceeded those in favour, the board would not be obliged to take any notices of the wishes of the owners of the company.

The best Ryanair could offer was the following statement: “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."

What has attracted shareholders' ire is the decision to hand O'Leary 10mln shares if certain targets are met, namely the achievement by the airline group of €2bn in net income in any year up to and including 2024, or the share price stays above €21 – for 28 consecutive days between 1 April 2021 and 31 March 2024.

Ryanair shares currently trade at €9.79, down 1.0% on the day.

The pressure group, Institutional Shareholder Services, has said the dangling of the shares bonus in front of O'Leary has no “compelling justification”.

Shareholders also did not seem overly impressed with the reappointment of O'Leary crony, David Bonderman, as company chairman.

His appointment was approved by 75.2% of the votes cast; in the City, any vote below 90% tends to raise a few eyebrows, although Bonderman can draw some consolation the level of support he received this year topped last year's 70.5%.

Non-executive director Kyran Coghlan, the deputy chairman of Davy Stockbrokers, which numbers Ryanair among its client base, also attracted little enthusiasm for his reappointment.

This year, 71.1% of the votes cast were in favour of his reappointment; last year, it was 66.8%.

According to the Ryanair board, “ Kyran McLaughlin continues to be an independent non-executive director within the spirit and meaning of the 2014 Code”.

Bonderman and McLaughlin have both served on the board of Ryanair as independent non-execs for more than nine years, which some have suggested means their independence is open to question.

Meanwhile, Michael Cawley, who served as deputy chief executive officer and chief operating officer of Ryanair from 2003 to March 2014, is also deemed to be an independent non-executive director.

His reappointment was approved by 78.0% of the votes cast, which was down from 81.9% last year.

Howard Millar, who served as deputy chief executive and chief financial officer of Ryanair from January 2003 to December 2014, has also been deemed by the board to be an independent director. His vote slumped to 70% from 78.5% in 2018.

Louise Phelan, another “independent” non-executive director, saw 82.4% of the votes cast in favour of her keeping her seat on the board, down from 96.0% last year.

Phelan is vice president of global operations at PayPal, which is one of Ryanair’s payment service providers, but the board is satisfied there is no conflict of interest in her dual roles.

Based on those votes, it seems the only group more cheesed off with the airline are its pilots, who started a 48-hour strike yesterday in support of claims for improved pay and working conditions.

The pilots are likely to be all the more miffed because the industrial action has caused little disruption to the airline's schedule.

On top of that, the no-frills airline has probably charged the pilots extra for going on strike …

The unrest over executive pay and the pilots' industrial action caps a tough week for the airline as it, like other operators in the sector, was rocked by the sharp rise in the oil price following the attack over the weekend on Saudi oil installations.


Quick facts: Ryanair Holdings plc

Price: 8.95244 EUR

Market: LSE
Market Cap: €9.78 billion

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