Ryanair votes for pension increase paid to Aer Lingus CEO Christoph Mueller

Pension increase for Christoph Mueller sparked Government anger

Christoph Mueller, chief executive of Aer Lingus, was paid €1.52 million by Aer Lingus in 2013, including a basic salary of €475,000, which has been frozen at this level since 2009. Photograph: Getty

Christoph Mueller, chief executive of Aer Lingus, was paid €1.52 million by Aer Lingus in 2013, including a basic salary of €475,000, which has been frozen at this level since 2009. Photograph: Getty

Fri, May 2, 2014, 16:47

Ryanair has voted yes to the “say on pay” resolution put to today’s Aer Lingus AGM, and the outcome of the poll is due to be announced later today by the Stock Exchange.

The Government objected to the pension increase granted recently by Aer Lingus to its chief executive Christoph Mueller by voting against the motion relating to remuneration when it was put to shareholders at the airline’s agm today.

Chairman Colm Barrington said that because a significant number of the proxy votes received on the issue had been negative, the issue was being put to a poll.

This means that shareholders who attended the meeting get to vote according to the number of shares they own, as against each shareholder voting by way of the showing of hands.

The Government owns 25 per cent of the shares and with some institutional investors rumoured to be about to vote against the remuneration resolution, there was a prospect of the motion being voted down.

However it is understood Ryanair, which owns just under 30 per cent of the company, is to vote in favour of the motion.

A defeat would be hugely embarrassing for Aer Lingus and Mr Mueller and could force the airline to do a U-turn on its decision to increase the employer contribution to the chief executive’s pension from 25 per cent to 40 per cent of his basic salary.

However Mr Barrington said it was the board’s view that it should ensure Mr Mueller stayed with the company and was properly motivated. He said the chief executive’s package was below the average for Irish plcs. Mr Mueller did not speak at the AGM. The resolution is not binding on the company but Mr Barrington said the board would pay heed to the views that have been expressed.


Not binding
The increase in Mr Mueller’s remuneration brought his pension payment last year to €175,000.

The Government’s unprecedented decision to oppose the pension rise for Mr Mueller relates to the ongoing dispute over the deficit in a pension scheme operated by the airline for general workers, who are facing significant cuts in their benefits to plug the hole in the scheme.

In a statement to The Irish Times last night, the Department of Transport, Tourism and Sport confirmed that Minister Leo Varadkar intended to vote against the motion on remuneration.

“The Government decision is based on the remuneration report’s specific reference to an increase in the employer contribution to the CEO’s pension from 25 per cent to 40 per cent of base salary,” the statement said.

“The department has engaged intensively with Aer Lingus and has expressed strong concerns to the company about this particular point.

“Aer Lingus is facing a serious problem with the IASS pension scheme [operated alongside the Dublin Airport Authority and SR Technics] .

“Whatever resolution is ultimately found to resolve the IASS scheme will involve significant reductions in the pensions that members receive or expect to receive.

“It is totally inappropriate that at such a time the pension contribution for the CEO should increase from 25 per cent to 40 per cent.”

The department acknowledged that Aer Lingus’s performance under Mr Mueller, who took over as chief executive in 2009, has been “excellent”, with the company is experiencing its fourth consecutive year of profitability.


Appropriately rewarded
“It is appropriate that senior executives be appropriately rewarded in the normal course of events for good performance,” it added.

“However, in setting the remuneration of senior executives, the board needs to be cognisant of the overall situation in the company.”

Mr Mueller was paid €1.52 million by Aer Lingus in 2013, including a basic salary of €475,000, which has been frozen at this level since 2009.

The pension increase and various bonuses were granted to him following the European Commission’s decision to reject Ryanair’s takeover bid in February 2013.

The State’s stance on Mr Mueller’s pension follows intensive lobbying by trade union groups at the airline, who are incensed at the pension rise for the German executive at a time when their members are facing significantly reduced benefits from the IASS scheme.

A spokesman for Mr Varadkar said the vote on Mr Mueller’s remuneration would have no impact on his role as chairman of State-owned An Post.

We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.