Ryanair CEO Michael O'Leary's contract extension until 2032 includes a share-based incentive program that could pay him €153 million, but it's facing opposition from major shareholder advisors. The payout is contingent on Ryanair achieving either an annual profit exceeding €4 billion or its share price reaching €42 for 28 consecutive days. Independent analysts like Alex Irving from Bernstein project Ryanair's net profit to be around €3.2 billion by O'Leary's contract end, suggesting a significant gap to meet the €4 billion target, with jet fuel prices being a key variable.
The incentive program allows O'Leary to purchase 10 million Ryanair shares at a strike price of €26.70 per share. If the share price hits €42, the 10 million shares would be worth €420 million, yielding a profit of €153 million after accounting for the purchase price of €267 million. Two influential shareholder advisory firms, Institutional Shareholder Services (ISS) and Pensions & Investment Research Consultants (PIRC), have recommended that investors vote against the proposal at the upcoming Annual General Meeting in Dublin.
ISS acknowledges the ambitious nature of the targets but warns that such a large potential payout could encourage excessive risk-taking by the CEO. They also highlighted that the goals need to be achieved only once, not maintained over an extended period. Ryanair, however, anticipates strong shareholder support, expecting a two-thirds majority in favor, and the company's board has defended the "unusual" arrangement as necessary to retain and motivate O'Leary, who currently owns about 4% of the airline. O'Leary's basic salary is also set to increase by 50%, from €1.2 million to €1.8 million annually, starting from FY28, with an annual bonus capped at 50% of his basic pay.
