Ryanair CEO Michael O'Leary could receive a new share-based incentive program worth around €153 million if ambitious targets are met. Ahead of Ryanair's annual general meeting, two major shareholder advisors are recommending investors vote against the proposal.

Shareholders will vote on the compensation program at Ryanair's annual general meeting in Dublin on Thursday.

The proposal gives Michael O'Leary the opportunity to buy 10 million Ryanair shares for €26.70 per share if he remains with the company for the next six years.

In order for the options to expire, Ryanair must also reach one of two targets: an annual profit of more than 4 billion euros or a share price above 42 euros for 28 consecutive days.

If the share reaches 42 euros, the 10 million shares would be worth 420 million euros, while O'Leary's purchase price would amount to 267 million euros. The difference is 153 million euros.

Advisor recommends no

Institutional Shareholder Services, ISS, recommends that shareholders vote against the proposal. The advisor notes that the goals are ambitious but warns that the potentially large compensation could encourage excessive risk-taking.

ISS also points out that the goals need to be achieved but not necessarily maintained for any extended period.

The European shareholder advisor Pensions & Investment Research Consultants, PIRC, also recommends shareholders say no.

Ryanair expects support

Despite the criticism, Ryanair expects the proposal to pass. A spokesperson for the company tells Business Post that it expects a two-thirds majority in the vote.

Ryanair's board itself describes the option program as unusual compared to incentive programs for other senior executives. The board also justifies the arrangement with the need to retain and motivate Michael O'Leary.

O'Leary already owns around 4 percent of Ryanair.