Ryanair shareholders have approved a new incentive scheme for chief executive Michael O'Leary that could be worth around €150 million. Around 61 percent voted in favour of the proposal, despite two major advisory firms advising shareholders to vote against it.
The decision was made at Ryanair's AGM on Thursday. The final voting results are expected to be announced later in the day.
The program gives O'Leary the opportunity to purchase ten million Ryanair shares at a price of €26.70 per share if certain conditions are met.
In order for the options to be exercised, O'Leary must remain with the company for the next six years. In addition, Ryanair's annual profit must exceed four billion euros or the share price must be above 42 euros for 28 consecutive days.
At a share price of €42, the ten million shares would be worth €420 million, while O'Leary could buy them for €267 million. The difference is €153 million.
O'Leary: A vote of confidence
Ahead of the AGM, O'Leary rejected the description of the arrangement as a bonus and emphasized that the compensation is dependent on the company achieving the set goals.
– I have not negotiated any bonus. I have a stock option program, which I will not receive unless I double the share price over the next five years, he said before the annual general meeting.
O'Leary also described the shareholder support as a clear vote of confidence.
Ryanair's shares were trading around 22.55 euros ahead of the meeting and, according to the data, had fallen 23.5 percent since the turn of the year.
Advisor recommended no
Prior to the vote, shareholder advisor ISS had recommended that shareholders vote against the proposal.
ISS noted that the program contains ambitious targets for both share price and earnings, but at the same time warned that the size of the compensation could encourage excessive risk-taking.
The advisor also pointed out that the goals need to be achieved but not necessarily maintained over a longer period.
Pensions & Investment Research Consultants, PIRC, also recommended a no. Among the objections were that parts of the program, according to the advisor, deviate from accepted practice and that the cap for the long-term incentive program exceeds 200 percent of base salary.
Despite the recommendations, the proposal received support from around 61 percent of voting shareholders.
