AER LINGUS yesterday defeated two motions from its largest shareholder Ryanair, which sought to reduce significantly the pay of the airline’s chairman and other board members.
At its annual general meeting, Aer Lingus chairman Colm Barrington also rejected a request from a Ryanair representative to have a third motion, relating to compensation payments for executives in the event of a change of ownership, being put to a vote.
Two representatives from Ryanair posed a series of questions to Mr Barrington relating to the sharp increase in directors’ fees at Aer Lingus in recent years.
Mr Barrington said the increased fees reflected the fact the directors’ responsibilities were “considerably greater” as a public company compared with its previous status as a State-owned entity.
Mr Barrington told shareholders he had written to the Department of Transport and the employee share ownership trust (Esot) yesterday to inform them that “we will be having another look at our fees” in the context of a wider package of cost-cutting measures that Aer Lingus plans to implement to trim its overheads.
He said the details of this would be announced in “due course”.
Mr Barrington added that Aer Lingus’s directors had already taken a voluntary 20 per cent cut in fees in February.
After the meeting, Mr Barrington told journalists that his decision to review directors’ fees had not been prompted by Ryanair’s recent campaign on the issue. “It really wasn’t influenced by Ryanair’s statements at all, because Ryanair’s statements are ridiculous,” he said. “I can assure you that Aer Lingus directors earn every cent they get paid.”
Ryanair proposed that the chairman’s fee be cut to €35,000 from its current level of €140,000 and that other directors be paid only €17,500 compared with the €36,000 fee they receive.
A representative for the Esot informed the meeting that it was voting against the Ryanair motions on directors’ fees.
In a statement following the Aer Lingus meeting, which was held in Santry, Dublin, Ryanair said: “Sadly today’s rejection of Ryanair’s cost-cutting proposals leaves the board of Aer Lingus and the Minister for Transport with no credibility when they begin talking to staff and other suppliers over the coming months about the cost cuts needed to restore Aer Lingus to profitability.”
Earlier, a number of shareholders expressed dissatisfaction with statements relating to trading and cash reserves made by Aer Lingus in its defence document of December 22nd, which recommended to shareholders that they reject Ryanair’s then bid.
Mr Barrington rebuffed the criticism and said all statements made by the airline in the defence document were correct at that time.
Mr Barrington was also asked why he had not bought shares in Aer Lingus since joining its board last September. He said the airline had been in a closed period for most of his time with Aer Lingus, which precluded him from dealing in its shares. This would continue until the company has announced its restructuring plan, he added.
