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Aer Lingus bosses will share in millions if a sale goes ahead

There’s some big money riding on the IAG buyout offer.

Former Aer Lingus chief executive Cristoph Mueller
Former Aer Lingus chief executive Cristoph Mueller
Image: Mark Stedman/Photocall Ireland

CURRENT AND FORMER bosses at Aer Lingus could share in a payday worth nearly €6.3 million if the airline’s proposed sale to suitor IAG goes ahead.

And easily the biggest share of that windfall would go to the airline’s former chief executive, Christoph Mueller, who stood down from his post at the end of February to take over the troubled Malaysia Airlines.

In January Aer Lingus confirmed it was weighing an all-cash offer from British Airways parent company IAG to buy the airline for €2.55 a share after previously knocking back several approaches at lower prices.

Since then, the Irish airline’s chairman, Colm Barrington, has said it was the “strong view” of the board that being part of the major airline group would have “a compelling commercial logic” for Aer Lingus and would also be positive for Ireland.

But the deal has run into political roadblocks over handing over the government’s 25% stake due to fears the merger would result in jobs cuts and a loss of connections – particularly to London’s pivotal Heathrow airport.

Ireland Aer Lingus Source: AP Photo/Shawn Pogatchnik

A big payday

However if the sale did go ahead at the proposed price, which values the airline at about €1.35 billion, former boss Mueller could walk away with over €4 million alone. His plan to step down was first announced in July last year.

The latest Aer Lingus annual report showed that, as of the end of last year, Mueller held easily the largest number of shares among the company’s directors. His 709,555 existing shares would be worth €1.8 million if the offer from IAG went ahead.

But his real pay day would come from cashing in one million share “options” he had outstanding in the company for meeting September 2012 and 2013 targets for the airline’s market price.

Aer Lingus operating loss Former Aer Lingus chief executive Christoph Mueller Source: Niall Carson/PA Wire

The options give him the right to buy the shares at a massive discount and, if exercised, would boost his total shareholding to a value of €4.36 million on the IAG offer.

Mueller’s average purchase price on the shares would be only about 25% of the proposed buyout price – returning him a profit of about €1.925 million on the options.

That would be on top of the €1.24 million he received in salary and benefits last year – down on the €1.52 million he received in 2013 – the biggest piece of which came from a €523,000 performance-related bonus.

Aer Lingus Business AGMS Aer Lingus chairman Colm Barrington with Mueller in 2013 Source: Mark Stedman/Photocall Ireland

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Who else?

The next-largest tranche of shares was in the hands of Barrington, who held 300,000 shares worth €765,000 at the purchase price.

Meanwhile new chief executive Stephen Kavanagh, who first joined the company in 1988, also owned a significant piece of the airline – 282,748 shares worth about €721,000 at the offer price – as of the end of December.

Aer Lingus_2011 Stephen Kavanagh, right, with Mueller in 2011 Source: Mark Stedman/Photocall Ireland

Chief operating officer Fergus Wilson, who has been in the post since 2011, held 120,410 shares worth €307,000.

Board member William Slattery, who is also the executive vice president of US financial firm State Street, had 26,295 shares worth €67,000.

Nicola Shaw, the chief executive of UK railway High Speed 1 and another board member, owned 23,945 shares worth €61,000.

Money Animated GIF Source: Giphy

First published 11.41am

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About the author:

Peter Bodkin  / Editor, Fora

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