AER LINGUS chief executive Dermot Mannion bowed to growing shareholder pressure yesterday and agreed to cancel a lucrative severance package he had agreed with the airline only three months ago.
The move followed a lengthy emergency meeting of the Aer Lingus board at its headquarters at Dublin airport yesterday. The meeting was called after Minister for Transport Noel Dempsey and the airline's employee share trust Esot had both indicated that they would support Ryanair's request this week for an extraordinary meeting of shareholders be held to vote down the new contract terms.
Chief financial officer Seán Coyle, who joined Aer Lingus from Ryanair last year, also agreed to scrap his
severance package. Both deals were signed off by John Sharman just before he stepped down as Aer Lingus chairman in early October. They were negotiated by the airline's remuneration committee, which is chaired by solicitor Ivor Fitzpatrick.
Mr Mannion's contract changes meant he would have earned a pay-off of up to €2.8 million in the event of "constructive dismissal" by any new owner of the airline. Mr Coyle would have earned about €1.2 million. Aer Lingus said Mr Mannion and Mr Coyle had requested the contract changes be removed.
Mr Mannion added: "We have no hesitation in terminating this condition with immediate effect in order to focus our attention on defeating the unsolicited bid from Ryanair which fundamentally undervalues Aer Lingus and is incapable of completion."
Mr Dempsey "welcomed the decision as the right decision". Ryanair chief executive Michael O'Leary described the move as a "flipflop" by Mr Mannion and Aer Lingus chairman Colm Barrington.
"Why did the chairman of Aer Lingus defend the chief executive's 'failure fee' just five days ago and state that 'such a contract is perfectly normal' and a week later rescind it. Aer Lingus claimed that this was a
'constructive dismissal' payment. It is now evident that it was nothing of the sort."
Irish Congress of Trade Unions general secretary and Aer Lingus board member David Begg said yesterday that he felt "personally quite betrayed" when he heard of the pay-off terms for Mr Mannion.
Speaking in advance of the announcement that the package had been scrapped, Mr Begg said it made him "absolutely mad" and he was sharply critical of "people in Aer Lingus making ready parachutes for themselves of a very grandiose nature". Mr Begg said that, despite being a member of the board, he had not sanctioned the package.
Separately, it emerged last night that former Bank of Ireland governor Laurence Crowley is joining the Aer Lingus board as a non-executive director.