By Miklos Budai, airwaysmag.com
A new proposal would give Ryanair (FR) CEO Michael O’Leary a €458,000 annual bonus. However, the proposal came under fire as an influential shareholder advisory firm suggested that shareholders should oppose said bonus.
According to Reuters, Institutional Shareholder Services (ISS), the world’s largest proxy adviser, said it was “difficult to justify” the bonus payout. According to ISS, the bonus is about 92% of the maximum he could have received. The firms went on to point out that a bonus this big is unethical in these challenging times.
“This payment raises concerns, given the current uncertainties facing the company and the airline industry, and in view of the broader stakeholder experience,” claimes ISS. The firm says that the number of bonuses reflects how different airlines react to the global COVID-19 pandemic.
There will be a non-binding meeting on September 17, where ISS wants shareholders to oppose the bonus. In the past, O’Leary has had issues with shareholders regarding his pay. Following his position change last year, his base salary has been reduced in favor of his bonus plans. Shareholders voted only a little above 50% in favor of the plan.
CEO Michael O’Leary is not the only one being criticized. ISS, with two other companies, advised voting against Wizz Air (W6) CEO József Váradi’s HUF188m (€532,000) bonus. The reason was W6 missing its target revenue, firing 1,000 workers, and using loans and government support.
However, the controversy about IAG owner Willie Walsh’s retirement award was the loudest. Walsh should receive an £880,000+ award following his departure from the airline group. IAG member British Airways (BA) is about to cut 12.000 positions.
It is hard to give an answer to this question. While workers fear for their living, executives are voting on big bonuses for themselves. It certainly does not look good, but there may be a reason for such payouts. While other managers around the World are voluntarily cutting their paychecks, some are not.
Ryanair and Wizz Air both survived the first wave of the pandemic relatively well. The latter opened several bases while closing a few. Bonuses like this are a way of saying thanks to the CEO for handling the situation well, some would say.
However, the huge retirement award for Walsh may be unethical. While his work is commendable, IAG airlines are facing heavy criticism regarding their handling of the COVID-19 crisis.