PARIS – Ryanair RYA.I boss Michael O’Leary’s proposed 458,000 euro ($540,600) annual bonus came under fire on Friday, as an influential investor advisory firm urged shareholders to oppose the package in a non-binding vote later this month.
Proxy advisor Institutional Shareholder Services (ISS) said the pay award for the financial year ended in March “raises concerns” and was hard to justify amid the unprecedented aviation crisis sparked by COVID-19.
Ryanair declined to comment on the voting recommendation, reported earlier by the Financial Times.
The pandemic is increasing pay scrutiny at companies that have taken government aid or slashed jobs. Criticism of O’Leary’s package follows an ISS recommendation against British Airways owner IAG’s ICAG.L 883,000 pound ($1.17 million) send-off for retiring CEO Willie Walsh.
While both votes are non-binding, any rejection of pay plans by IAG investors on Sept. 8 or Ryanair’s Sept. 17 meeting would be highly embarrassing for either of the companies, which have both used Britain’s COVID Corporate Financing Facility (CCFF).
An IAG spokeswoman pointed out that Walsh’s bonus had been awarded on 2019 performance and his pay since cut by 20% as the crisis unfolded.
“The worsening impact of COVID-19 on IAG has seen salary reductions for all senior management and the board,” she said.
British Airways has sparked union outrage by cutting 12,000 positions in response to the crisis, while Ryanair has negotiated pay cuts to reduce the 3,000 job cuts initially announced. IAG shareholders will also be voting on a 2.75 billion euro rights issue designed to bolster a balance sheet already more robust than most of its peers’.
O’Leary’s pay has proved contentious before. His five-year bonus plan worth up to 100 million euros scraped through with 50.5% support in a shareholder vote last September.
British pilots’ union BALPA called the CEO bonuses “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.
The ISS recommendations drew a cooler reaction from analysts such as Daniel Roeska at Bernstein, who said both pay awards were defensible as a means to incentivize management performance that was all the more critical in a crisis.
“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.
Along with low-cost peer Wizz Air WIZZ.L, Ryanair is “the airline that will get through this with the least damage” and could have cut many more jobs, Roeska also said. “It’s not unreasonable to reward management for that performance.”