Ryanair CEO Michael O'Leary has shrugged off shareholder opposition to a new pay deal that could see him receive a €150 million ($163 million) payout. The agreement, which runs from 2028 to 2032, would grant O'Leary the option to buy 10 million shares if the company's share price reaches €42 or if post-tax profits increase by approximately 75% to €4 billion ($4.35 billion). Despite a significant shareholder revolt, with about two-thirds of investors voting in favor, O'Leary defended the package, emphasizing that he receives substantial compensation only if the airline hits challenging financial performance targets.
This new deal replaces a previous arrangement from 2019, which also faced pushback from nearly half of Ryanair's investors. That earlier deal offered O'Leary up to €100 million ($109 million) if he doubled post-tax earnings or oversaw an 80% rise in the share price. O'Leary consistently argues that his basic salary is modest and that his large payouts are contingent on exceptional company performance, directly aligning his incentives with shareholder value creation.
Investment advisory firms like ISS and PIRC expressed concerns about the scale of the potential reward, suggesting it could encourage excessive risk-taking and that O'Leary might benefit from broader market movements rather than direct outperformance. For instance, the €42 share-price target could be met due to a general rise in airline stocks or a decline in oil prices, factors largely outside O'Leary's control. Critics also noted that he would receive the award if Ryanair's profits exceed €4 billion in any single year, not necessarily sustained performance.
Despite these criticisms, a majority of shareholders, 61% according to one report, approved the deal, highlighting a prevailing belief that O'Leary's leadership is crucial for Ryanair's continued growth. Barclays, for example, viewed the pay proposal as strengthening the investment case for the stock, citing the strong alignment between management and shareholder interests. Ryanair estimates that hitting the share-price target would generate approximately €16 billion ($17.4 billion) in additional shareholder value, with O'Leary's potential gain representing less than 1% of that.
Ryanair's shares have dropped by about a quarter this year, partly due to the Iran conflict impacting global airline stocks. The airline also reported a significant drop in quarterly profits, down over a third to £462 million ($576 million), attributing this to rising jet fuel costs and a 6% decline in average fares, despite a 6% increase in passenger numbers. This complex operating environment underscores the demanding targets set for O'Leary's potential payout, which requires him to remain with the company until 2032.
