Aer Lingus has gifted former chief executive Christoph Mueller lucrative long term share rights despite his departure from the airline last month as IAG tries to take over the €1.4bn-valued carrier.
In a break from standard procedure, Mueller has been gifted with lucrative long term incentive share rights by members of the Aer Lingus board. Fellow executive Andrew MacFarlane also left the airline over the last year but did not receive the same boardroom largesse.
The German chief executive announced his resignation last year. He intended to depart the airline this May, but left in February three months earlier than planned.
He is leaving Aer Lingus, where the State holds 25.11pc of equity, to take over the top job at troubled Asian carrier Malaysia Airlines. The Government voted against his pay package at Aer Lingus at its last AGM.
Under standard Aer Lingus rules, Mueller should have lost the right to claim millions of shares previously granted under long term incentive plans, because he left mid-way through their vesting period.
In the last three years he has been awarded 1,487,355 shares as part of incentive plans, based on Aer Lingus hitting targets that stretch out to 2016. At today's value, those shares are worth €3.5m.
Aer Lingus' normal policy on the matter says: "When long-term incentive plan participants leave employment before the end of the performance period, outstanding awards will generally lapse".
This is what happened in the case of departing finance chief Andrew MacFarlane, who saw "his outstanding 2012 and 2013 LTIP awards were forfeited upon his retirement from the Board," according to Aer Lingus documents.
But the airline's remuneration committee, whose members include Aer Lingus chairman and former cigarette company boss Nigel Northridge, have decided to award Mueller access to the lucrative scheme based on a pro-rata basis.
If Aer Lingus reaches its targets in 2015 and 2016, then Mueller will get a share payout - even though he is not staying at the company to help it deliver.
"Given the agreed circumstances of his departure and the success of his tenure as chief executive officer, the committee decided it was appropriate that Mr Mueller's outstanding long term incentive plan share awards (granted in 2012, 2013 and 2014) continue in being, subject to the performance conditions being satisfied within the performance period.
"He is being treated as a 'good leaver' for the purposes of his share options and outstanding long-term incentive shares awards," the airline's remuneration committee decided.
"Mr Mueller's departure was by mutual agreement. This is evidenced by the fact that his planned departure was announced on 18 July 2014, while his actual departure took place on 28 February 2015. When an awardholder leaves by mutual agreement, of the awardholder and the employer, LTIP awards may vest on a pro-rated basis," Aer Lingus told the Sunday Independent.
Mueller received a salary, bonus award and pension payment worth €1.2m in 2014. He and his family are also entitled to 10 years worth of free travel with Aer Lingus.
IAG is edging closer to sealing a €1.4bn deal to buy Aer Lingus subject to satisfying certain conditions. Last week Gulf airline Etihad indicated it would sell its 5pc stake in Aer Lingus if IAG takes control.
Sunday Indo Business