Summary

• Investors of Ryanair Holdings revolted over huge pay of the airline’s Chief Executive, Michael O'Leary.
• Investors refused to support a massive pay package of £3.2 million to the airline’s boss in the financial year ending in March 2020.
• The rebellion came after concerns were raised over O'Leary’s £419,000 bonus payment, which was little less than £458,000, the maximum bonus he was entitled to.
• The remuneration plans passed in the company’s AGM with 65.8 per cent votes casted in favour.
• Institutional Shareholder Services, an advisory group, had said earlier in September 2020 that the shareholders should vote against the remuneration plans.

Ryanair Holdings plc (LON:RYA) faced revolt from its investors over fat pay of the airline’s Chief Executive, Michael O'Leary. More than a third of the company’s voting shareholders voted against the executive’s pay during its annual general meeting (AGM) 2020 held on 17 September 2020. They refused to support a whopping pay package of £3.2 million (€3.47 million) to the airline’s boss in the financial year that ended in March.

The uprising followed concerns that were raised over his £419,000 (€458,000) bonus, little lesser than £458,000 (€500,000), the maximum bonus that O'Leary was entitled to. He received a total of €3.47 million, out of which €500,000 formed the base pay. The base pay was down from €1 million that he received in 2019 and it would be halved next year in response to the coronavirus crisis. It also included €2.5 million of shares-based payments.

However, the remuneration plans passed in the AGM with 65.8 per cent votes casted in his favour. There were around 34.2 per cent of the votes that were recorded against and 1.9 per cent of voters abstained from voting. The bonus was seen as a cause of worry when the airline industry has been suffering due to the coronavirus-led crisis.

Ryanair has also been under financial pressure. During the coronavirus crisis, Ryanair took £600 million from Bank of England under the creditor’s support scheme. The airline is known to have furloughed many of its staff, besides announcing to axe around 3,000 jobs. In August 2020, the company was compelled to cut almost a fifth of its flights over September and October 2020 due to a sharp fall in ticket bookings in the wake of recent spike in Covid-19 infections.

It is to be noted that this was the second consecutive year when O'Leary's pay package was passed by its shareholders with a narrow vote percentage. As compared to this year, in 2019 the airline’s chief executive pay package received 51 per cent votes from its shareholders. Last year, O’Leary’s pay package included base pay of €1 million, €768,000 bonus, and €1.5 million of shares.

Institutional Shareholder Services (ISS), an advisory group had said earlier in September 2020 that the company’s shareholders ought to vote against the remuneration plans. The ISS observed that it was tough to justify a bonus at around 92 per cent of the maximum possible limit, especially at a time when the aviation industry was facing the challenges of the coronavirus-led crisis.

ISS emphasised that several larger UK listed companies who were in a lesser challenging scenario than Ryanair had either postponed or cancelled executive bonus payouts. They had undertaken such decisions during the crisis times to present solidarity with key stakeholder groups, including employees and shareholders at large.

Also read: Travel woes during the pandemic: UK to lose £22 billion as international travel dips

Also read: Aviation Sector Eyeing Revival Once Out of the Coronavirus Catastrophe

Recent financial updates from Ryanair

The airline company’s Q1 2020 results were released in end-July 2020. They presented a first quarter (Q1) loss of €185 million as compared to €243 million profit in the Q1 2019. More than 99 per cent of the airline’s fleet remained grounded from Mid-March and end-June 2020. Ryanair restarted flight operations in late June 2020. The airline traffic at the airline dropped from a high level of 41.9 million during Q1 2019 to 0.5 million for Q2 2020.

(Source: Ryanair website)

Stock performance of Ryanair Holdings plc

On 21 September 2020, at 12.03 PM, the company’s stock (LON:RYA) was trading at €11.27 down 6.67 per cent from its previous day’s close of €12.08. The 52 week low high range was recorded as 8.14 and 16.10. With a market capitalisation (Mcap) of £12,898.00 million, the stock provided a negative return on price, which was minus 19.01 per cent on a year to date (YTD) basis. The total volume of shares traded at the time of reporting was recorded at 699,557.

Ryanair reacts to Ireland’s decision of reducing the green list

In other developments from the travel industry in which the government of Ireland on 17 September 2020 cut its green list of countries from ten to seven sparked an angry response from Ryanair. The announcement from the Irish government became effective from 21 September 2020. The green list includes those countries that do not require a 14-day mandatory quarantine upon arrival into Ireland. The seven countries in the green list are Cyprus, Finland, Germany, Iceland, Latvia, Lithuania, and Poland.

Ryanair’s outrage was because of removal of popular tourist hotspots from the list, including Italy and Greece. The airline described the government’s move as chaotic mismanagement of travel during the coronavirus pandemic.

Italy’s aviation authority met Ryanair over disagreement

The national aviation authority of Italy, ENAC (Ente Nazionale per l'Aviazione Civile), that accused Ryanair of not complying with the health and safety norms related to the coronavirus pandemic met the airline’s representatives on 16 September 2020 to discuss the issue. In August 2020, ENAC had warned the airline that it could ban the airline over failing the safety guidelines on its aircrafts as well as during departure and arrival at its national airports. Ryanair had denied the accusations made by the authority. The authority said that during the meeting Ryanair committed to follow the rules, besides agreeing on the need for necessary safety measures to support the recovery of the air transport.

Later, O’Leary clarified that the reports regarding the non-adherence to health and safety norms at some airports in Italy were not true. He added that during his meeting with the Italian authorities, the government officials had accepted that Ryanair complied with the public health measures.

To sum up, the investors are rightly concerned about handing over a fat pay check along with a good bonus amount to the Ryanair’s Chief Executive, especially during the unforeseen coronavirus led crisis times. While the remuneration plans have passed for now, the company might need to think of alternate plans going forward to keep its financial books healthy.