Top brass must be transparent or pay the price

IT’S hard to keep Michael O’Leary or Ryanair out of the news, but then again that is part of his and its business model.

Good news, bad news or controversy doesn’t seem to bother them — as long as they are in the news.

So whether it’s landing at airports 100km away from the named destination, threatening to add charges for using the bathroom, charging for priority boarding and allowing everyone to board at the same time, or making it difficult for those with any ailments or infirmities to board a plane does not seem to matter. It is news and, better still, the exposure underpins the fact that, by and large, the flights are cheap and plentiful.

So with the exception of having to pay out to disgruntled punters a few times, it’s all been win-win for O’Leary and Ryanair.

Michael O’Leary and Ryanair have eyed up Aer Lingus in the past and, in so doing, has become the major minority shareholder. However, Michael O’Leary is not getting it all his own way. It is no surprise that either Aer Lingus management or the unions should not want him to take over. However, Government is also against Ryanair taking over Aer Lingus, apparently on the grounds of the elimination of competition but it probably as much to do with the traditional view that the relevant Government department was always classed as the downtown office of Aer Lingus. Even Europe is concerned with a Ryanair takeover. Nevertheless, even with all those negatives, it still remains the single largest shareholder.

However, as the owner of almost 30% of Aer Lingus shares, it is surprising that Aer Lingus management takes the view that Ryanair is not entitled to have access to information that is critical to the past performance of Aer Lingus.

Some years back, Aer Lingus decided to put many of its staff on new contracts. Rather than simply changing the individuals’ contracts, it would appear it decided to make it more attractive for the employees by firstly making them redundant and then re-employing them on the new contract. The Revenue Commission forced Aer Lingus to pay a hefty fine, together with the due tax. As a major shareholder Ryanair requested to see the “confidential” report that was prepared into the “leave and return” scheme. Aer Lingus refused.

We can only wonder what shareholders rights amount to? Management, a.k.a employees, decide that owners, major and minor, are not entitled to information critical to the value of their shareholding. The courts seem to agree.

Perhaps I am missing something, but is a similar attitude not part of the cause of our current travails? The banks through their senior management recklessly trade and lose money like it’s going out of fashion.

The shareholders are decimated, and that includes pension funds, and indeed the banks’ own employees, at all levels, who were encouraged to buy shares. Meanwhile, the top brass in the banks get to continue with their telephone number salaries and bonuses or leave with big lump sums and considerable pensions.

At AGM after AGM, management and directors never told their shareholders what they were doing to shareholder value, let alone the problems they were creating for the taxpayers.

Even now, banks refuse to heed their owners, whether it is the salary cap, bonuses paid or passing on interest rate reductions. It’s fantastic — folk lose our money, decimate our pensions, are not affected themselves and we must pay for it.

It would appear shareholders have fewer rights than employees and the directors and managers hold all the cards. Balance is required, particularly where shareholders risk losing a lot of their shareholder value.

Directors and mangers must be brought to heel or pay the price.

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