Ryanair chief executive Michael O’Leary will gain a bonus of up to €100m if he hits performance targets.
The UK-listed and Irish based company issued options for 10m shares to Mr O’Leary at a strike price of €11.12, which he can buy should he increase the company’s profitability to €2bn and/or its share price to €21 over the next five years.
The difference between 10m shares at €21 each and the same number at €11.12, their closing price on Friday, is €99m.
If Mr O’Leary increases profitability but the share price does not hit €21, his bonus would be smaller.
Alan MacDougall, managing director of Pirc, which works with the Local Authority Pension Fund Forum that holds about 1 per cent of Ryanair stock, said: “I would have thought he would be a bit sheepish accepting that, given the current state of the company. But I don't think pay matters much to him — it's more about power.”
Ryanair’s 11 non-executive directors have received options of 50,000 shares each under the same terms, meaning their bonus could be as much as €500,000.
Ryanair, which announced a third-quarter loss of €22m on Monday, reaffirmed its warning that full-year profit would be in the range of €1.0bn-€1.1bn.
The range had been €1.25bn-€1.35bn before two profit warnings in the past four months, but Mr O’Leary said a fall in ticket prices, as well as the cost of staff strikes and the high price of oil, had hurt the airline.
Royal London Asset Management, another large Ryanair shareholder, has said it does not consider the remuneration committee to be “wholly independent”, since it includes a former executive, “which is contrary to best practice”.
On the day of the results Mr O’Leary announced he would remain at the top of Ryanair for another five years, but would step down as chief executive of the airline itself as the company overhauled its structure.
The airline said it would move in the next year “to a group structure not dissimilar to that of IAG”, owner of British Airways and Iberia, with a small senior management team overseeing Ryanair, Laudamotion, based in Austria, Ryanair Sun, in Poland, and Ryanair UK.
Mr O’Leary will be chief executive of Ryanair Holdings until at least 2024 and the Ryanair airline itself will appoint a new chief executive later this year.
In his new role, Mr O’Leary will still be responsible for some of the most important decisions affecting Ryanair, including merger and acquisition opportunities, reducing costs and acquiring aircraft.
Ryanair could not be reached for comment.
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