This week, our blog post goes back to the questions we sent our community in our newsletter a few weeks ago about the Ryanair public dispute and corporate governance situation.
In August, NEDonBoard published a thought-provoking piece urging nomination committee to consider whether their boards are equipped to engage with their stakeholders. In our article, we reviewed and commented on the composition of the Ryanair boards of directors and the annual corporate governance report. For those who missed this post, it can be read here.
We asked our community a few questions related to the situation at Ryanair which has been ongoing for months and has attracted public attention on how senior management and the board are dealing with the public dispute.
- What lessons can NEDs and Board members take from the situation?
- To what extent is a public dispute like this, involving staff and customers, a sensible strategy?
- Could the impact so far be considered to be within a Board’s strategic risk appetite?
In this post, we are sharing some of the opinions of the members who participated in the prize draw (and received a discount to attend our 1-day course: How do you Become an Effective NED on Board!). There were a few common themes which we describe below:
The role of the institutional shareholders
You questioned the role of the institutional shareholders, who you expect to challenge the board of directors on its composition and vote against re-appointment. Ryanair is a public company and as such, they are indeed quite a few institutional shareholders in the capital structure.
The Ryanair AGM was held on 20th September 2018. The media were banned from the meeting, “to allow shareholders to discuss all matters freely with the Board without these discussions being distorted for PR purposes”. We note that this is very unusual for media not to be given access to AGM.
Glass Lewis, a shareholder voting advisor, recommended investors vote against the re-election of chairman David Bonderman. Britain’s Local Authority Pension Fund Forum publicly said that it recommended members vote against Ryanair’s financial report at AGM and oppose the re-election of Chairman David Bonderman.
We have yet to see read the official announcement of the revamp of the Ryanair board of directors.
The FRC comply or explain approach
You questioned the appropriateness of the comply or explain approach. Our view if that the FRC Comply or Explain approach provides flexibility to companies to which the Code applies. In the case of Ryanair, there is no compliance with the Code and the explanations are far-fetched. The annual governance report is simply a “tick the box” exercise for Ryanair with limited thoughts given to good governance.
As a reminder, Sir Win, Chairman of the FRC will be with us on 17th October to discuss Corporate Governance Reforms and notably the introduction of the new Corporate Governance Code. Register your attendance if you have not done so already! We are keen to have Sir Win discuss the appropriateness of the Comply or Explain approach with our community.
You questioned whether the CEO can be permitted to continue his role given his antipathy to the customers and employees of the airline. His dismissive comments are damaging to the Ryanair franchise.
NEDonBoard members as Ryanair customers
You also said that you have been avoiding Ryanair in recent months and have booked your travels with alternative carriers whenever possible. The NEDonBoard team shares your frustrations and a few of our team members, who have been regular Ryanair travellers have also been avoiding the airline.
Comments on our blog post are always welcome. Please e-mail us at [email protected] (title: Ryanair blog).
On behalf of NEDonBoard, Elise Perraud