Ryanair boss Michael O’Leary is on track to earn a €100 million bonus after the low-cost airline’s shares hit a record high this week.
Shares rose to €18.99 on Friday, bringing their gains for the year to more than 50 per cent and underlining Ryanair’s position as by far the most valuable airline in Europe.
Under a bonus scheme agreed in 2019, Mr O’Leary can earn share options worth about €100 million if the airline’s share price hits €21 for 28 days, or it reports €2.2 billion in annual profits after tax.
The payout would be one of the biggest in corporate European history, and see Mr O’Leary granted the options to buy 10 million shares at €11.12 each.
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Financial analysts covering the company have an average share price target of €24 over the next 12 months, according to Bloomberg data, while the airline has forecast profit after tax of between €1.85 billion to €2.05 billion for the fiscal year to March.
The incentive plan was originally due to run until 2024, but was extended until 2028 in December last year, when the shares were below €13.
Mr O’Leary was paid €925,000 in Ryanair’s most recent financial year, but also owns 3.9 per cent of the company, a stake which has a market value of €907 million, according to FactSet.
Low-cost rival Wizz Air has also offered its chief executive an eye-catching incentive plan. József Váradi can earn £100 million (€116 million) if that airline’s share price hits £120. But Wizz’s growth has been hit by supply chain issues that have grounded part of its fleet, and its shares are virtually flat this year at £20.
Mr O’Leary, who became Ryanair chief executive in 1994, has masterminded the airline’s breakneck growth. The airline has cemented its position as the undisputed leader in European low-cost aviation after using the disruption caused by the pandemic to increase its market share as financially weaker rivals retrenched.
Ryanair is the second most valuable airline in the world by market capitalisation behind Delta Air Lines in the US, according to Bloomberg data, and has outlined plans to double passenger numbers over the next decade.
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Mr O’Leary told the FT earlier this year that he believed there was room for more growth in Europe, even as some analysts questioned whether the market is essentially at maximum capacity.
“As long as we don’t do something stupid – which is a daily challenge in this industry – we will continue to wipe the floor with every other airline in Europe,” he said.
Analysts at Barclays have said Ryanair’s growth targets “should be relatively straightforward”, but that like all airlines the company faces risks from “regulatory intervention, particularly relating to environmental regulation, but also consumer protection”.
Ryanair did not respond to a request for comment. – Copyright The Financial Times Limited 2023
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