RYANAIR HAS written to 4,000 shareholders of Aer Lingus to seek support at the former State-owned airline’s annual meeting on June 5th for resolutions aimed at reducing the “fat cat” fees paid to its rival’s directors.
Ryanair, which owns 29.8 per cent of its rival, has proposed that the Aer Lingus chairman’s pay be cut to €35,000 while non-executive directors should be paid €17,500.
It also wants shareholders to have the power to vote on any special exit payments that might be offered to Aer Lingus executives as compensation for them having to leave the airline following a change of ownership.
Aer Lingus’s chair was paid €175,000 in 2008 while non-executives earned €45,000. In February, the directors agreed to a voluntary 20 per cent cut in the sums paid to €140,000 and €36,000 respectively.
Aer Lingus has allowed the resolutions on directors’ pay but has refused to put the motion concerning the exit payments on to the agenda.
Speaking at a press conference in Dublin yesterday, Ryanair chief executive Michael O’Leary said his proposed reductions in directors’ fees at Aer Lingus would bring them back to 2006 levels.
He said this was justified given that Aer Lingus was now loss-making and its shares had declined steeply in recent times.
“The only things not falling at Aer Lingus are its fares and the directors’ fees, which have exploded,” he said.
“We’re not asking them to do it for free, we just want them to show a bit of leadership and go back to where the fees were a couple of years ago.”
Mr O’Leary highlighted how six non-executive directors at Ryanair earn €210,000 between them, while chairman David Bonderman waives his fee. Aer Lingus’s board was paid €730,000 in 2008.
Mr O’Leary also questioned if Aer Lingus chairman Colm Barrington is being paid extra for assuming executive duties following Dermot Mannion’s recent departure.
Mr Barrington told The Irish Times: "I'm not getting a cent extra." In a statement, Aer Lingus dismissed Mr O'Leary's claims. "He continually seeks to mislead everyone for his own motives. Today he criticised our non-executive directors' fees as being excessive. "In truth, Aer Lingus non-executive directors' fees are on average 24 per cent lower than 14 of the top ISEQ companies and this is before they took a voluntary reduction of 20 per cent. He also claims that directors enjoy free first-class travel on Aer Lingus and other airlines. The truth is, as is the case with every airline in the world, including Ryanair, Aer Lingus directors have concession travel on Aer Lingus services only.
“In relation to its third resolution . . . the board has the right and responsibility to determine the details of management contracts in the best interests of the business and all of its stakeholders – not at the behest of its biggest competitor.
“Michael is welcome to our agm and he can ask anything he likes, We’ll be ready for him.”
