Government to vote against Aer Lingus chief's pay package
Published 02/05/2014 | 02:30
Aer Lingus chief executive Christoph Mueller will receive a serious and embarrassing reprimand at the company's annual general meeting today when the Government dramatically votes against approving a €1.5m pay package received by the airline boss.
The Government revolt is unprecedented and heaps pressure on Mr Mueller, pictured below, to surrender a chunk of his 2013 pay packet. It included a €420,000 performance-related bonus, a €400,000 bonus for defending the latest Ryanair bid and a €175,000 pension contribution.
Ryanair is also expected to vote against Mr Mueller's pay package.
It is an increase in Mr Mueller's pension contribution that has prompted the backlash. The scale of the chief executive's pay packet – details of which were revealed in March – stoked controversy because it came as airline staff are facing big cuts to their own pensions.
A spokesman for the Department of Transport, Tourism and Sport, which is headed by Minister Leo Varadkar, confirmed that the Government will vote against the AGM resolution today to approve the airline's remuneration report. The State owns a 25.1pc stake in Aer Lingus.
"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 25pc to 40pc of base salary," said the spokesman. "The department has engaged intensively with Aer Lingus and has expressed strong concerns to the company about this particular point," he added.
Even if the resolution to approve the Aer Lingus remuneration report is rejected by a majority of shareholders today, the result is non-binding and does not mean the pay received by directors in respect of 2013 is compromised.
But the decision to vote against it is also especially sensitive as Mr Mueller was named chairman of An Post last year by the Government.
The spokesman at the Department of Transport conceded that Mr Mueller and his management team have been successfully running Aer Lingus and that it's appropriate that they're rewarded for that. "However, in setting the remuneration of senior executives, the board needs to be cognisant of the overall situation in the company," he said. "The issue here is not the total level of the CEO's remuneration package. This issue is about the increase in the CEO's pension contribution." An Aer Lingus spokesman declined to comment last night.
Aer Lingus yesterday reported an operating loss of €48.5m for the first quarter. It remains on target to generate an operating profit of around €61m this year.