Michael O’Leary, Managing Director of Ryanair, may soon be about to cash in a 100 million euros bonus due to the good results of the airline company’s share values, which benefitted from increased profits following the boom in post-Covid tourism. This news has spread over the media, not only in Europe, because of the size of the premium in question, representing, as it does, one of the biggest bonuses ever obtained by the manager of a European company.
Obviously, the premium results from an agreement made between the manager and the company back in 2019: the bonus may be activated if Ryanair share value stays above 20 dollars for at least 28 days or if annual profits reach a total of 2.2 billion euros net of tax. At present, the context would seem to be in favor of the manager who has guided the airline company since 1994 in its dizzying growth: the share price has reached 19 euro, gaining over 70% from the beginning of the year. As for profits, the forecast is that, after a first six-month period with a growth of 59%, the year may close at around 2 billion euro. After all, the low-cost company is the second most highly-rated on the Stock Exchange, after Delta Airlines, way above its competitors Lufthansa, British Airways-Iberia e Air France-KLM. So, it follows everything is fine… or is it? There can be no doubt that if a bonus is part of an agreed packet, included in a contract, then it must be respected. In this case it is known that it was due to expire in 2024 but, whereas in December 2022 when share values were quoted at around 13 euro and when the agreement was prolonged to 2028, today analysts forecast they will increase to 24 euro during the course of the year 2024. The increase in worth is considerable and justifies the top manager’s remuneration, maybe even at these record levels if we analyze it from the point of view of its economic sustainability on the part of the company.
We all know that good governance cannot disregard parameters of remuneration and incentivization that are both ecological and sustainable. Companies quoted on the Stock Exchange have to adhere to such criteria whereas there is no such obligation for companies who are not accountable to shareholders. There is, however, another level of evaluation, quite apart from the merely economic and financial, to be found more in the sphere of ethics. There is, in fact, a business ethic of entrepreneurship which also holds the value of service to the community in account and not just the celebration of the manager’s ego, however much s/he is the chief artificer in creating this value. Who bears in mind the collectivity and the possibility (indeed, the necessity) of a fairer distribution of wealth and profits so as to reduce inequalities. It is obvious that there cannot be hard and fast rules to govern such behavior but I do believe that personal opportunism should sometimes give way to a sense of opportunity and community. Because even the most rampant of businesses, and the unrestricted pursuit of profits still need a balanced ecosystem. A balance which becomes untenable when disequalities reach levels that cannot be ethically sustained.