Ryanair flies in to help Aer Lingus CEO Mueller with pay package vote

Ryanair’s decision to vote in favour of Christoph Mueller’s 2013 remuneration package as CEO of Aer Lingus saved the plc from an embarrassing defeat on the issue.

The minuscule size of the victory margin means it is still a serious blow to the board and it is something it will have to take into consideration when sitting down to work out this year’s package.

Chairman Colm Barrington made clear his and the board’s view that it felt obliged to ensure Mueller remained with the company and stayed motivated.

Given that he indicated his view that in fact the CEO’s pay deal may not match comparable packages on the Irish plc scene, and is by no means out of kilter with comparable positions in the European aviation sector, pressure on the board to restrain growth in the package must be most unwelcome.

That is the obvious business view, though there is no getting round the ugliness of the jump in the employer contribution to Mueller’s pension coming at a time when the pension scheme to which Aer Lingus workers belong is in such crisis.

The non-binding “say on pay” motion that caused all the fuss yesterday is just that. You get a say on the pay but you don’t get to stop it. Such resolutions are considered good corporate practice these days but have done absolutely diddly squat in terms of holding back the seemingly relentless rise in senior executive pay packages.

The logic given by Barrington as to why Mueller had to be paid so much illustrates an aspect of the whole conundrum. Aer Lingus has to pay a competitive rate to the man they are so determined to keep on their staff. This in turn feeds into the pressure on other companies to pay competitive rates to their top men (they are nearly always men). And so it goes.

Voting on such non-binding resolutions serves little purpose. Which probably explains the Ryanair vote.