Mueller deserves his €1.5m pay because he saved Aer Lingus
Published 03/05/2014 | 02:30
Most of us try to make a good fist of our job, while knowing that somebody else could probably do it just as well. Even a prime minister or chief executive is usually aware that there are dozens of people waiting in the wings with equal ability.
Just sometimes, the reverse is true. Winston Churchill was no run-of-the-mill prime minister and may well have been unusual enough to embody the difference between Britain winning and losing World War II. For that, the present queen offered to make him the Duke of London and give him an enormous income. No other prime minister has been offered a duchy but then no other prime minister made such a difference to the course of his country's history.
Aer Lingus chief executive Christoph Mueller is no Churchill but he is no ordinary chief executive either. Most chief executives take over a good company, improve it a bit and then hand it on to somebody else. There is every reason to think that Aer Lingus would not exist today if the German had not taken the ailing airline in hand when he was appointed in 2009. That was the airline's darkest hour. Senior executives were defecting almost monthly, the share price had tumbled 67pc in just 12 months and the company had recently reported a pre-tax loss of €119.7m.
Rapidly departing executives, big losses and a plunging share price are usually signs that a company is in a fatal tailspin and many analysts predicted back then that Aer Lingus was doomed thanks to internal problems, fierce competition from Ryanair, the bombed-out Irish economy and the global financial crisis. Several other European airlines, facing a more benign set of circumstances, did go the wall in the previous recession in the early part of the decade, including Swissair.
It is undoubtedly tough for Aer Lingus employees to swallow cuts to their pensions while the head of the company gets a pay increase, but they might well not have pensions at all were it not for Mr Mueller.
Even if the airline had survived, the current Aer Lingus management is merely doing something that almost every other company in Ireland has been forced to do already: rebuild a broken pension system that cannot meet its obligations thanks to mistakes made over decades and also government decisions which have forced many pensions into the red.
Workers right across the private sector have seen their retirement plans go up in smoke as companies retrench while many others have suffered as the Government dipped its hands into their personal pensions with the so-called pension levy. It is hardly the present chief executive's fault that the pension scheme is broken. Mr Mueller's salary is enormous but he was paid rather less in the past. In 2010, he earned €1.1m and took home €1.3m last year. He is, in short, being rewarded for a rising share price that has tripled since he took over and added more than half a billion euro to the value of the airline.
The salary is high, but no higher than the salaries earned by many other company executives, owners of small companies dotted around the country, barristers, pop stars or sportsmen.
To say that somebody should earn a stonking big salary because somebody else earns the same is a poor argument that is, unsurprisingly, popular among business leaders.
Mr Mueller does not deserve €1.5m because other chief executives pay themselves similar sums; he deserves it because he saved Aer Lingus. Every society and most groups within society have ways of recognising unusual contributions. In academia it is honorary degrees. In the army it is medals. In public life there are knighthoods, the Legion d'honneur and the like. In business, there is money.
By making a symbolic gesture against a not unreasonable pay packet, the Government has proved itself anti-business. This should not be too surprising. The Government likes to portray itself as pro-business but there is more to being pro-business than saving bust banks that should go to the wall, attending job announcements and allowing foreign companies to get away with paying taxes. A government that has a genuine interest in promoting Irish business should accept that a chief executive's salary should be decided on its merits rather than political optics.
The pre-election decision to vote against Mr Mueller's salary was cack-handed and populist in the worst sense of the word.
Aer Lingus has a poor record when it comes to retaining talented chief executives. Bertie Ahern's government carelessly lost Willie Walsh by playing to the gallery. Let's hope the present Government has not made an equally stupid error.