Ryanair board survives agm intact but dissatisfaction evident

Independence of long-serving board members questioned by shareholders

 

Ryanair looks likely to face increasing pressure from shareholders in the future to make changes to its board, even though investors voted to re-elect key figures such as long-serving chairman David Bonderman at its annual general meeting.

Ahead of Thursday’s meeting, advisory firms such as Glass Lewis called on shareholders to oppose the re-appointment of Mr Bonderman, who has served for 22 years, and long-serving non-executive Kyran McLaughlin, appointed 17 years ago.

However, in the end 70.5 per cent of them voted to re-elect Mr Bonderman and 66.8 per cent supported Mr McLaughlin. Those majorities were lower than the 98.5 per cent attracted by chief executive Michael O’Leary and the 99.7 per cent drawn by recent appointees Emer Daly and Róisín Brennan.

Speaking afterwards, Mr Bonderman said he would reserve his position on how long he intended staying in the Ryanair chair. However, Mr O’Leary made it clear that he wanted him to remain.

“Frankly if we could encourage him to continue to chair the company for another couple of years, I personally would encourage him to do so,” Mr O’Leary said. “I don’t think he will.”

Mr O’Leary maintained that Mr Bonderman, who runs the multi-billion dollar investment fund TPG, stayed in the role “as a favour to us”. Ryanair pays him fees of €100,000 a year, but the chairman owns 7.5 million of its shares, worth about €100 million at yesterday’s share price of around €13.60.

Need to evolve

Alison Kennedy of Aberdeen Standard, which owns 11 million Ryanair shares, said her company thought long and hard before supporting Mr Bonderman and Mr McLaughlin, and did so partly because none of the other non-executive directors had more than five years’ experience.

She argued that investors increasingly questioned whether directors with long service on a company’s board could maintain their independence and objectivity.

Given the industrial relations challenges Ryanair faces, Ms Kennedy said its governance needed to evolve.

“So, we expect that there will be clear progress on succession for these two key board positions by the time of the agm next year,” she said.

Ms Kennedy warned that if there were not, Aberdeen would vote against Mr Bonderman and Mr McLaughlin.

Staff issues

Paul Doughty, executive member of the Local Authority Pension Fund Forum, which has £230 billion in assets, said ahead of the meeting that his organisation also questioned Mr Bonderman’s independence.

He also pointed to the recent strikes at the airline and argued that Ryanair needed a board that was “strong enough” to challenge Mr O’Leary’s views on how to manage staff issues.

Mr O’Leary argued afterwards that Ryanair regularly changes independent directors and was one of the few Irish PLCs that had 33 per cent women on its board. Four of its 12 directors are women.

He maintained that the airline was already “acting on” issues raised by shareholder representatives such as Ms Kennedy.