In light of the funding challenges faced by Ryanair, the pay package of CEO Michael O’Leary has significantly increased under his new agreement with the airline. O’Leary’s annual base pay has risen to €1.2 million, resulting in an overall pay package of €2.7 million over the past year.
This package includes a base pay of €500,000 and a bonus of €425,000, as well as a non-cash charge of €1.78 million for unvested share options. The new agreement extends until July 2028 and incorporates a higher base pay alongside a reduced maximum potential annual bonus.
Despite the financial difficulties encountered by Ryanair, such as significant bond repayments and the completion of a €850 million repayment, the company aims to meet its funding commitments and expects to allocate €2.8 billion in the current year.
Once these obligations are satisfied, Ryanair intends to resume modest returns to shareholders. Notably, Ryanair has witnessed a growth in revenues within Ireland and has a history of distributing funds to its shareholders.
Ryanair CEO’s Pay Package
Ryanair CEO Michael O’Leary’s new pay package reflects a significant increase compared to the previous year’s pay package. The new deal, effective from April 1, 2023, extends to July 2028 and includes an annual base pay of €1.2m and an overall pay package of €2.7m in the last 12 months. O’Leary’s base pay consists of €500,000, with an additional bonus of €425,000. However, there is also a non-cash charge of €1.78m for unvested share options.
It is worth noting that this new pay package represents a slight decrease from the previous year. The agreement also includes adjustments to the maximum potential annual bonus and the vesting date for share options, which are dependent on the airline’s financial targets.
Details of the Deal
Under the terms of the agreement, the annual base pay for Michael O’Leary has been significantly increased to €1.2m. This represents a 140% increase from the previous year.
In addition to the base pay, O’Leary will also receive a bonus of €425,000. However, there has been a reduction in the maximum potential annual bonus, which will now be 50% of the base pay.
Furthermore, the vesting date for share options has been extended and will now depend on the airline’s financial targets.
The agreement, which commenced on April 1, 2023, will extend until July 2028.
These adjustments to O’Leary’s pay package come amidst funding challenges faced by Ryanair, including significant bond repayments and expected capital spend. Once these commitments are met, the focus will be on restarting modest returns to shareholders.
Funding Challenges and Outlook
Given the significant bond repayments and expected capital spend, the focus will shift towards restarting modest returns to shareholders once funding commitments are met.
Ryanair is faced with upcoming bond repayments in August 2023, September 2025, and May 2026, and has recently completed a bond repayment of €850m in March 2023.
In addition, the airline is expected to have a capital spend of €2.8bn in the current year.
Despite these funding challenges, Ryanair has a history of returning over €6.8bn to shareholders from 2008 to 2020 through buybacks, special distributions, and special dividends.
The company’s financial outlook is closely tied to its ability to meet its funding commitments and achieve its financial targets.
Once these commitments are fulfilled, the board will prioritize shareholder returns.
