LDN - Business

Frustrated Ryanair investors target chairman after year of strikes

[September 20, 2018] By Conor Humphries

GORMANSTON, Ireland (Reuters) - A significant minority of Ryanair <RYA.I> shareholders voted against the re-election of the airline's long-serving chairman on Thursday but they overwhelmingly rejected calls by trade unions to oppose Chief Executive Michael O'Leary.

The votes at the company's annual meeting were the first chance for investors to give their verdict on a series of strikes and a year of management mis-steps that have seen the share price fall 17 percent.

After a number of shareholders in the lead up to the vote publicly called for Chairman David Bonderman, 75, to step down, he was re-elected with 70.5 percent of votes, a significant fall from the 89 percent he received last year. Bonderman has chaired the company since 1996.

But they reaffirmed their support for O'Leary, who has pursued a tough line with trade unions, with 98.5 percent re-electing him to the board, down from 99 percent last year.

O'Leary, 57, said he would now negotiate a new contract to take him beyond 2019, but was reluctant to get tied into a five-year contract at his age.

"The overwhelming majority of our shareholders are supportive [of chairman David Bonderman] ... and we should be very appreciative," O'Leary, who became chief executive in 1994, told the meeting.

Ryanair has struggled with labor relations in recent months and endured its worst one-day strike last month, disrupting the plans of an estimated 55,000 travelers.

Another one-day strike by cabin crew is planned across five countries on Sept. 28.

Ahead of the meeting a number of institutional investors, including Royal London Asset Management and Britain's Local Authority Pension Fund Forum (LAPFF), had announced publicly that they would oppose Bonderman's re-election.

"We hope Mr Bonderman and the board will heed the message shareholders have sent today and announce plans for him to step down," said Ian Greenwood, chairman of the LAPFF said after the vote.

"Ryanair should recruit an independent chairman who will strengthen the board to provide greater oversight and challenge to Mr O'Leary," he added.

Speaking to journalists, Bonderman, 75, declined to speculate on when he might leave, but said he thought criticism of the board in recent months had been "way off base."

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Ryanair Chief Executive Michael O'Leary addresses a news conference in Schwechat, Austria, July 31, 2018. REUTERS/Heinz-Peter Bader/File Photo

Bonderman, the founder of private equity firm TPG Capital resigned from the board of Uber in 2017 after an ill-judged joke that more women on the board means "more talking".

UNION ANGER

Ahead of the meeting, a number of trade unions issued statements calling for shareholders to oppose the re-election of both Bonderman and O'Leary.

"While he (O'Leary) is still there as the embodiment of Ryanair's values, the distrust among many staff is likely to continue and with it the industrial unrest," BALPA pilots' union General Secretary Brian Strutton said in a statement.

"If this opportunity is missed, it is difficult to envisage how Ryanair can move forward."

While O'Leary said he did not expect many strikes over the winter, he declined to speculate when asked more than once if the industrial action could escalate.

After the meeting, he told journalists he had been asked by the company's remuneration committee to extend his contract but that he did not want to commit to a new five-year deal.

Instead, he said would rather move to a rolling 12-month contract at some point in the next few years. He has a stake in the company of just over four percent according to Thomson Reuters Eikon data.

Ryanair had initially banned media from the meeting, prompting some to buy shares and others to stay overnight at the meeting venue north of Dublin. At the last minute management decided to allow journalists to attend.

(Reporting by Conor Humphries; Editing by Adrian Croft and Keith Weir)

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