Government fails to stop Aer Lingus chief’s pension hike

A Government bid to block huge pension boosts for the boss of Aer Lingus has been voted down by the narrowest of margins.

A 50.03% majority saw shareholders decide in favour of the airline’s CEO, Christoph Müller, keeping his lavish pension increase while workers face fears that theirs will be cut.

Mr Müller’s 2013 remuneration totalled €1.52m, up by nearly 18% on the previous year, and boosted by nearly €1m in bonus payments and pension contributions. The €70,000 rise — to €175,000 — in pension contribution, came about via an increase in employer contribution to his pot, from 25% to 40% of his basic salary.

Transport Minister Leo Varadkar pointed out the vote was not binding and urged the airline’s board to reconsider the pay package.

Ministers had expressed concern at the rise and had hoped wielding its 25% stake would encourage other investors to follow suit, but Ryanair backed the deal with its 30% stake.

The Cabinet move came in the wake of a continuing dispute over the deficit in a pension scheme operated by the airline for workers who are facing major cuts in their benefits in a bid to cover the gap in the scheme.

Aer Lingus chairman Colm Barrington praised Mr Müller’s track record, but said the board would “carefully consider” shareholders’ concerns.

Before the vote, Eamon Gilmore said it was not appropriate for the CEO to be given the pension boost.

“Mr Müller has quite a generous remuneration package as it is. There are also issues at Aer Lingus and in the Dublin Airport Authority in relation to pensions and the Government’s view is that it is not appropriate that the senior person in the organisation is having an enhanced pension at a time when the company is talking to employees and pensioners at the company about the future of the pension scheme,” he said.

Asked whether Mr Müller’s pension top-up was fair, when other Aer Lingus employees are, potentially, facing 10% to 20% cuts to their pensions, Mr Barrington said that no deal has been struck on the €780m IASS pension deficit, but cuts could be higher if not for the support Aer Lingus is offering to the process.

He said the company’s board needed to compensate in order to retain and incentivise management and pointed to the rebuilding job Mr Müller has led, since taking over in 2009, in turning a company with a €170m loss into a profitable one, able to maintain dividend payments for the past three years. He added that Aer Lingus’s CEO pay is competitive with other similarly-sized European airlines and “well below” the mean for Irish PLCs. However, he said the board will “carefully consider” shareholder views and they will help inform policy. Stopping short of agreeing he was hinting at reined-in pay levels next year, Mr Barrington said “we will take shareholder issues into account”.

In the other contentious vote, ICTU general secretary David Begg was reinstated to the board with the backing of 62% of shareholders.