Michael O’Leary, the colourful chief executive of Ryanair, is sitting on a €50m paper gain as a result of the rapid growth in the airline’s passenger numbers and profits since it adopted its strategy of being nice to customers.
The airline boss was granted options over 5m Ryanair shares in October 2014 when he signed a five-year contract, committing him to the company until late 2019. The share options, which will vest based on the achievement of “exceptional performance targets”, can be exercised at €8.35 a share.
Ryanair shares hit a high of €18.68 last week after the company reported a pre-tax profit of almost €1.32bn for last year. The shares closed at €18.20 on Friday, putting a paper value of €91m on the options, almost €50m above their exercise price.
At the time the options were granted, Ryanair said it expected traffic to hit 120m customers by 2019 but it reached that number in the last financial year, which ran to the end of March. The airline declined to answer questions last week about whether the targets attached to the share options had already been met, or if the targets would be reset in light of the airline’s growth.
According to the company’s latest annual report, O’Leary’s share options are exercisable “subject to him still being an employee of the company through July 31, 2019”. Before the five-year contract deal, O’Leary was on a rolling one-year arrangement from the time he became chief executive of Ryanair in 1997.
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The share price acceleration has coincided with Ryanair’s adoption of its “Always Getting Better” plan, which has included the introduction of allocated seating and allowing passengers to have a second carry-on bag. As well as the share options, O’Leary owns almost 51m shares in Ryanair, which are worth €928m. Ryanair is targeting profits of €1.4bn-€1.45bn in the current financial year, which runs to the end of March 2018.