Ryanair boss's $110 mln payday required big lift
LONDON, May 30 (Reuters Breakingviews) - The end of the month typically means payday for workers across the world. But Michael O'Leary is going one better: the Ryanair (RYA.I), opens new tab CEO on Thursday hit a stock price goal that paves the way to share options potentially worth over 100 million euros. Investors in many ways have O'Leary to thank for the airline's longtime outperformance. But the decision to extend the scheme part way through – and the use of share buybacks – is a good example of how boards can make sure bulky executive pay reaches its destination.
Like a pilot 'going around' to attempt a second landing, the share options plan is in many ways a do-over. Announced in early 2019 as part of O'Leary's new contract, it had two tracks. It gave him the option to purchase 10 million shares at 11.12 euros apiece if he could get the share price above 21 euros for a 28-day period, or achieve an annual profit after tax of 2 billion euros, before the end of March 2024. But after Covid-19 tanked the airline industry and Ryanair's share price languished around 13 euros, the board in late 2022 took the decision to extend the plan into 2028, while bumping the after-tax profit target up to 2.2 billion euros.
In its most straightforward sense, the scheme has worked: having now ticked off the 28-day streak, O'Leary is incentivised to get the share price up by as much as possible into 2028, when – on the added condition he remains at the company until the end of July that year – his options vest, giving him the right to pocket shares at the agreed 11.12 euro price. Ryanair investors also get to hang on to their superstar CEO for a few more years, who since taking the helm in 1994 has transformed the company into Europe's largest listed airline by market capitalisation.
Still, one criticism of incentive packages based on simple share price targets is that they're often out of a CEO's direct control. Indeed, vaulting the 21 euro mark has required more than a few tailwinds. Short-haul leisure travel recovered, opens new tab more quickly from the pandemic than long-haul and business flying, for example, while delays in the delivery of new aircraft from Boeing (BA.N), opens new tab left Ryanair with more cash than expected, much of which was returned to shareholders. In its latest financial year, the company undertook around 1.5 billion euros of share buybacks, compared with zero buybacks during the previous four years. Most glaringly, the targets would probably not have been achieved had Ryanair's board not opted to extend the terms, given it delivered 1.9 billion euros of profit after tax – 100 million euros below the original target – in the year to March 2024, while the share price goal has only just been hit now, having averaged around 17 euros during the same 12-month period.
Granted, investors may not bemoan this shifting of the goalposts. Analysts are expecting Ryanair to post almost 2.3 billion euros of profit after tax in the year to March 2027, according to forecasts compiled by Visible Alpha, meaning the new targets would probably have been met through either route anyway. But the extension of the scheme and use of share buybacks mean this particular early arrival comes through a grey cloud.
Follow @Breakingviews, opens new tab on X
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BBC News
39 minutes ago
- BBC News
People Fixing the World Shipping containers fixing the world
Shipping containers are a staple of global trade, helping in the transport of all sorts of goods by sea across the world. But their relatively cheap cost and sturdy structure lends them to many other purposes. In this episode we look at a start-up business in the UK that uses shipping containers to store carbon captured from the air in the production of building materials. And we visit a school for poorer children created out of shipping containers that sits in the middle of a busy intersection in Mumbai, India. People Fixing The World from the BBC is about brilliant solutions to the world's problems. We'd love you to let us know what you think and to hear about your own solutions. You can contact us on WhatsApp by messaging +44 8000 321721 or email peoplefixingtheworld@ And please leave us a review on your chosen podcast provider. Presenter: Myra Anubi Producer: William Kremer India reporter: Chhavi Sachdev Editor: Jon Bithrey Sound mix: Hal Haines (Image: Myra with Nicholas Chadwick from Mission Zero outside a shipping container in Norfolk, BBC)
Finextra
an hour ago
- Finextra
How Artificial Intelligence is Empowering SMEs to Prevent Employee Turnover: By Dmytro Spilka
Employee turnover can be a highly costly burden on small to medium-sized enterprises, but could emerging technologies like artificial intelligence prompt improvements in retention rates? With the average employee costing an estimated £12,000 to replace for SMEs, instances of high turnover can be severely damaging to operational efficiency. With around 70% of employee turnover coming as a voluntary decision, it's a significant challenge for enterprises to manage engagement and satisfaction rates in a way that prevents the rigmarole of continuous job listings and onboarding strategies. For HR professionals, countering turnover is a frustration that can threaten the long-term growth of businesses. However, there are many measures that can be taken to limit the negative impact of turnover. Calculating Turnover Calculating your staff turnover can be a useful way to monitor for emerging trends within your SME while helping to report on current rates. To do this, find the average number of employees for the period you're observing while excluding temporary or seasonal staff members for the sake of accuracy. By adding the number of employees at the start of the observation period to those at the end, and then dividing them by two, you can calculate the average number of employees within your business. Now, to work out the turnover rate, you'll need to divide the number of employees who left the company by the average number of employees. Finally, multiply the result by 100 to calculate staff turnover as a percentage. With CIPD suggesting that the average staff turnover rate in the UK is 34%, any figure higher than this should be a suitable cause for revising your employee retention strategy. The emergence of artificial intelligence has also paved the way for unprecedented control in improving the engagement of enterprise staff, helping to improve the long-term satisfaction of employees. The AI boom carries some significant implications for employee turnover, and there are many ways in which the technology is already helping to prevent staff from looking elsewhere for work. With this in mind, let's explore some of the growing use cases of artificial intelligence in action: Predictive Analytics Artificial intelligence is capable of performing predictive analytics to forecast potential staff turnover by identifying trends and patterns at a rate that human HR professionals can't replicate. For instance, AI could find a correlation between the different management approaches of team leaders and employee disengagement. This can help to refine your SME's management styles to improve satisfaction levels and offer proactive training or support to your management team. With 92% of employees recognising the importance of working for an enterprise that values their emotional and physiological well-being, AI tools can also use predictive analytics to monitor work patterns and identify early signs of dissatisfaction before adapting the workloads of affected workers. These predictive insights can help stamp out instances of burnout, boost engagement, and lead to higher productivity among the workforce. Appraisal Accuracy Crucially, 69% of employees claim that receiving regular recognition from their employers would motivate them to work harder and stay longer in their respective roles. This means that optimising your appraisal system should be a priority if your turnover rates are too high. Artificial intelligence tools are helping to improve retention by empowering HR teams to craft personalised engagement strategies that improve the quality of feedback and recognition for employees. These real-time feedback loops help to alert management to instances of outperformance, and the ability of AI systems to identify and reward employees for their efforts can help to create a fair reward system that can help all workers enjoy seeing their hard work acknowledged accordingly. Additionally, artificial intelligence can help to drive more engagement among employees by creating bespoke development plans that match the individual skills, preferences, and career goals of workers to a program designed to enhance their strengths and overcome any weaknesses. This can help to provide a sense of purpose that can prevent instances of 'quiet quitting' or turnover. Personalized Training Employee training and upskilling can also be a key factor in retention over long periods of time, and AI's ability to generate personalised, engaging, and accessible learning experiences can form the cornerstone of a more engaged and productive workforce. By delivering tailored content recommendations based on the monitoring of prospective skill gaps and preferred learning styles, artificial intelligence can deliver relevant and effective training materials. Because skill gaps can be a leading cause of employee turnover, mitigating these shortcomings can significantly reduce instances of staff quitting SME roles. AI can also deliver interactive experiences and simulated environments that offer far more engagement than simple text-based training, and the ability to access bespoke models at the click of a button means that employees can enhance their skills in between workloads. The implementation of AI training can help employees feel more valued and equipped to grow within their roles, boosting their contentment and longevity in their positions. Boosting Retention Retaining employees can be a challenge for SMEs with ambitions towards balancing budgets and sustaining growth strategies, but the emergence of artificial intelligence tools can help to deliver greater levels of efficiency in retaining talented staff for longer. Through predictive analytics and a personalised approach to employee management, training, and appraisals, more SMEs can improve their employee retention, preventing harmful and expensive turnover rates and building a consistent level of productivity into the future. Embracing AI tools today can make a significant difference in shaping your plans for tomorrow, and building an employee-first culture with the help of technology gives you the best chance of overcoming the challenges that all ambitious enterprises face as they continue to grow.
Daily Mail
an hour ago
- Daily Mail
Mother, 54, who 'looted' £50,000 from her own daughters' trust that had been left to them in their grandmother's will must pay back every penny
A 'greedy' mother has been ordered to pay back the £50,000 inheritance she stole from her daughters that was left to them in their grandmother's will. Katherine Hill, 54, and her father Gerald Hill, 94, from south Wales, acted out of 'greed and spite' in taking the sum left for her daughters Gemma and Jessica Thomas. The £50,000 bequest was made for them by their grandmother Margaret Hill on the provision that they could access it when they turned 25 or wanted to buy a house. One of the girls then asked for access to the cash and discovered it was gone. Katherine and her father were trustees of the account when Margaret died in 2013, but they both raided the account of every penny in the space of a year. They were both last year found guilty of fraud by abuse of position with Katherine sentenced to 30 months imprisonment, where she served half in custody and half on licence. Gerald Hill was sentenced to 12 months imprisonment, suspended for 18 months. The Hills returned to Swansea Crown Court for a Proceeds of Crime Hearing in a bid to claw back their ill-gotten gains. Prosecutor James Hartson said Hill initially told investigators she had a 50 per cent equity share in her partner's home after paying the mortgage for nine years. Katherine Hill's daughters Gemma (left) and Jessica Thomas (right) lost their £50,000 inheritance thanks to their mother and grandfather's actions But she later withdrew the claim and said she had no equitable right to the house - with Mr Hartson saying her change of stance was a 'thoroughly dishonest' attempt to avoid payment. Judge, Recorder Greg Bull KC, ruled in favour of the prosecution, and said Hill had 'laundered' some of her daughters' money by paying her partner's mortgage. He said Hill and window cleaner Phillip Lloyd 'lived together as man and wife' and she could repay her daughters by raising equity from their home. Recorder Bull said: 'It is significant that investigations could not reveal what had happened either to that £50,000, or to what had happened to other relatively substantial sums left to Katherine Hill after her mother's demise. 'She still maintains that she has never received the £50,000. I disbelieve her on that and I find her answer to be totally untruthful. 'Mr Lloyd is fully aware of what happened to that £50,000 and has probably helped her at least launder it, if not enjoy the fruits of her fraud.' Recorder Bull said: 'That £50,000 was used for the benefit of both of them, it would have been used to pay the mortgage, it would have been used to pay their utilities, it would have used to enjoy their lifestyles - a lifestyle that they would not have been able to afford.' 'This is a couple who lived as man and wife, they shared their income and they shared the money looted by Miss Hill from her daughters.' Katherine was told she must pay £50,000 in three months or face six month prison in default. Mr Hill was ordered to pay £6,000 for his part in the fraud or face three months in prison. The court heard if neither of the Hills pay they will be jailed but their debts would not be cleared. In a victim impact statement read at Swansea Crown Court following the Hills' conviction, Jessica Thomas said she found it difficult how her family could cause her so much 'harm and pain' and the fact that they can lie so easily 'scares' her. The qualified nurse added: 'Financially, my life has been affected more than I thought.' In a written statement, her sister Gemma said that their actions have caused her to be in debt and 'it's been a great deal of emotional and financial stress.' She added that she feels 'let down and lied to' by two people who are meant to be her 'blood and family.' The withdrawals, made over the course of a year, included one for £15,000 and others for £10,000 - along with a single bank transfer of £2,300 directly into Katherine Hill's account. She claimed that transaction was used to pay for the family's boxer dog operation which Jessica had agreed to, adding that smaller amounts of money were spent on shopping trips at New Look and Primark on behalf of her daughters. She said: 'It was for their benefit - I didn't think I was doing anything wrong.' The fraud was only identified in 2018 when one of the daughters asked to access her share of the funds early to help buy a house with her boyfriend. Solicitors began a civil investigation into the fund and the police were called in.
