The organisation I have chosen is Ryanair and it provides a service. I chose to study this company as they are one of the biggest companies in Ireland and would have enough material regarding corporate governance as they have been in the spotlight regarding the topic for good and bad reasons.Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.
1Board CommitteesRyanair has a properly constituted board. It has an audit committee, Nomination committee, Remuneration committee, an executive committee, and an air safety committee. The Audit committee consists of a chairman and not less than 3 members who are not executives of the company. Its role is to monitor the financial reporting process, monitor the effectiveness of the internal control, risk and audit systems, monitor the statutory audit.
The members of this committee include Charles McCreevy, Declan McKeon, Dick Milliken, and Emer Daly. The nomination board consists of a chairman and not less than 3 members, who shall not be executives of the company. Members of this committee include David Bonderman, Michael Cawley, and Louise Phelan.
The function of this board is to decide on new appointments to the board and to other senior positions in the company. The selection process of directors should be carried out by the nomination committee, which then makes recommendations to the full board. The Remuneration committee will comprise of not less than three members who are all independent non-executive directors of the company. Members include Howard Miller, Julie O Neill, and Stan McCarthy. The role of this board is to decide on the appropriate remuneration packages for the executive directors. It is intended to increase the confidence of the shareholder on the internal processes of the organisation.
The Executive committee is a group of directors that are appointed by the directors. The Committee consists of a chairperson, vice-chairperson, secretary, and treasurer. David Bonderman, Kyran McLaughlin, Michael O`Leary, and Stan McCarthy are members of this committee.The Safety Committee is responsible for monitoring all Ryanair activities affecting safety and making sure the company follows safety policies and regulations. Recommendations are made to the Chief Executive and the Board of Ryanair in respect of safety, security and health and safety standards. Mike O`Brien is a member of this committee. 3.
1 Structure of the Board of DirectorsThe board of directors consists of the Chief Executive Officer; Michael O`Leary, the Executive Chairman; David Bonderman, and 11 non-executive directors. Michael is the chief executive officer and David Bonderman is a non-executive chairman. Other non-executive directors include Michael Cawley, Emer Daly, Mike O`Brien, Stan McCarthy, Charles McCreevy, Declan McKeon, Kyran Mclaughlin, Howard Millar, Dick Milliken, Julie O’Neill, Louise Phelan.4.
1 Skillset of DirectorsThe CEO of Ryanair, Michael O`Leary, had been a director of Ryanair since 1988 and was appointed CEO in 1994. He has a degree in Economics and social studies worked as a trainee with Stokes Kennedy Crowley, studying the Irish tax system. He founded two successful news agents 2 years later. He started with Ryanair when going to America to study Southwest airlines business model and used this for Ryanair.
David Bonderman is a non-executive chairman of Ryanair since 1996. He founded a private equity investment firm called TPG in 1992. He is also a director, officer, and shareholder of Air G.P. Inc. He is also a director of CoStar Group and General Motors.Michael Cawley is a non-executive director of Ryanair since 2014.
He had served as Deputy Chief Executive Officer and Chief Operating Officer of Ryanair from 2003 to March 2014 and was Chief Financial Officer and Commercial Director from 1997. Michael also holds directorships in Paddy Power and in the Kingspan Group. Before joining Ryanair, he was Group Finance Director of Gowan Group Limited, one of Ireland’s largest private companies and the main distributor for Peugeot and Citroen automobiles in Ireland. Michael has a degree in Commerce and is a member of the Institute of Chartered Accountants in Ireland.Emer Daly is a director of Ryanair since 2017. She is Board Chairman at RSA Insurance Ireland DAC, and is a Non-Executive Director and Chair of the Audit Committee of Permanent TSB Group Holdings plc and of Chetwood Financial Limited. Emer has also served as a Director of Payzone Plc and held senior roles with PricewaterhouseCoopers and AXA Insurance for over 20 years. Stan McCarthy is a director of Ryanair since 2017.
He has been the Chief Executive of Kerry Group since 2008. Stan joined Kerry Group in 1976 and has worked in various finance jobs. He has been Vice President of Sales and Marketing in the USA, a President of Kerry North America, and a Director of Kerry Group.Charles McCreevy has been a director since 2010. He has served as EU Commissioner for Internal Markets and Services. He has also been involved with the Irish Government, being Minister for Finance from 1997 – 2004, Minister for Tourism & Trade from 1993-1994, and Minister for Social Welfare from 1992-1993.
Declan McKeon is a director from 2010. Declan was an audit partner of PricewaterhouseCoopers and is still a consultant for this company. He is a director and chairman of the audit committee, and is also a member of the compensation committee of Icon plc.Kyran McLaughlin has been a director since 2001. He is Deputy Chairman and Head of Capital Markets at Davy Stockbrokers. Kyran is on the Board of Directors of Elan Corporation plc, and a director of a many Irish private companies.
Howard Millar has served as a non-executive director of Ryanair since 2015. He graduated from Trinity college and started off in Ryanair in 1993 being Director of Finance and became Deputy Chief Executive Officer and Chief Financial Officer in 2003 until 2014. He is Chairman of BDO Ireland and is a member of Irelandia Aviation’s advisory board. He is involved with Chartered Accountants Ireland. Dick Milliken has been a director since 2013. He was a CFO of the Almac Group and CEO of Lamont plc. He has a degree in accountancy and is a director of Bank of Ireland Mortgage Bank, NI Science Park Foundation and various private companies. He is a member of the Institute of Chartered Accountants.
Mike O’Brien is a non-executive director of Ryanair since 2016. Mike was a chief pilot and flight operations manager in Ryanair from 1987 until 1991. He was once head of Operations standards of the Irish Aviation Authority and head of flight operations for Maltese Civil Aviation Authority.
Julie O’Neill is a non-executive director at Ryanair. Julie was Secretary General of the Department of Transport for 7 years. At this time, she was involved with formation of the Dublin Airport Authority to allow the independence of Shannon Airport. She has worked in eight government departments regarding strategic policy development and implementation.Louise Phelan has been a director from 2012. Louise has been involved with PayPal since 2006 and is vice president for their Global Operations in Europe, The Middle East and in Africa. She was in the management of GE Money for a time. She is also a member of the Board of the American Chamber of Commerce and a member of the Dublin Chamber of Commerce, CCMA Ireland, the Women’s Executive Network (WXN) and the International Women’s Forum and is an Irish citizen.
5.1 Compliance with Key Regulations MSCI Research “Governance Metrics Report” June 2016 noted that Ryanair “falls into the highest scoring range for all the companies we assess relative to global peers indicating that the company’s corporate governance practices are generally well aligned with shareholder interests”.The board of directors are responsible for introducing new polices, approve the annual budget and decide big decisions in the company. The chairman and CEO are given clear responsibilities by the board.
Ryanair has a Code of Business Conduct and Ethics that sets out what is expected in the work environment, their business activities, their financial reporting, conflicts of interest, and what laws and regulations to follow. The company’s employees are expected to follow all laws and regulations. Ryanair ensures that employment laws and regulations are followed and that employees are treated fairly. As Ryanair operates in many countries, it must abide by the different regulations in these countries.
If employees fail to comply, it must be reported to the head of department. There is also Irish environmental legislation implementing applicable EU directives and regulations that the company follows, with all facilities abiding to all local and EU regulations. Ryanair’s engineering facilities across Europe hold toxic substances at various times. They comply with all regulations in the handling and storage of these substances. Waste is dealt with in compliance with the Environmental Protection Act 1996 and the Special Waste Regulations 1998.
Ryanair complies with the Modern Slavery Act 2015 which states that no one can be forced into labour or trafficked into labour. The company makes sure it purchases supplies from suppliers that comply with this act. 6.1 Appropriate Policies that are in PlaceIn conducting my research, I can now demonstrate that has various policies in place. Their ESG Policy comprises six key components:• Safety ; Quality• Energy Efficiency• Environment ; Carbon Emissions• Labour Management, Training ; Social• Ethics ; Transparency• Corporate Governance6.1.2 Ryanair prides itself in its safety policy and invest huge money into all aspects relating to safety. They have industry leading systems including a Safety Management System, an operational flight data monitoring system, and the Runway Awareness ; Advisory System.
Short term safety and security strategies are in place to ensure it is number 1 priority in the company. Safety groups are present at all their bases in Europe that examine safety and security. Training is essential with 5 simulator training centres in Europe to train pilots.
Fatigue is closely monitored and Ryanair’s Flight Time Limitations (“FTL”) Scheme complies fully with the EU 83/2014 and has been approved by the IAA.6.1.2 The company is focused on keeping its status as Europe’s greenest airline. It introduced its Environmental policy that has set targets to tackle climate change. This policy will keep Ryanair at the top spot of Europe’s greenest airline by meeting environmental targets, using the most efficient planes, and using only recyclable plastics.
6.1.3 The Labour Management, Training & Social Policy states that there are opportunities available for training and development in the company. The policy of People of any race, religion, age, gender, sexual orientation, or disability can work at Ryanair is present.
People are selected by their capabilities to do the job. The company wants to give back to the community by donating and organising fundraising events.7.1 Evidence of Corporate Social ResponsibilityRyanair demonstrates Corporate Social Responsibility by constantly reducing their emissions. The Air Travel Carbon and Energy Efficiency Report mentioned that Ryanair is the most environmentally efficient company in the business. In 2005, Ryanair cut emissions per passenger by 31% and reduced noise footprint of 86% per passenger by using only Boeing 737-800NG aircrafts, which is more economical than the older Boeing 737-200A.
Furthermore in 2014, they ordered 200 Boeing 737-Max-200 aircraft will reduce fuel consumption by up to 16% and reduce noise emissions by up to 40% per seat.Ryanair is constantly looking to improve all aspects of its business and improve the experience for it customers. It showed this by launching the its “Always Getting Better” customer charter. This promises that Ryanair will:• Put safety first• Have the lowest prices• Have most popular destinations• Ensure the experience is enjoyable• Be Europe’s most reliable airline.
• Strive to innovate and improve.The company shows CSR by contributing to numerous charities across Europe nominated by the staff and fundraise for charities with cycles and other events. The company also promotes entrepreneurship by donating €1.
5 million to Trinity Business School over 5 years. Governance failures Ryanair have had many governance failures and still do not abide by certain codes. Investors are angered that Chairman David Bonderman has overstayed the 9 years allowed in his position, serving 20. Executives Howard Millar and Michael Cawley also annoyed investors by giving themselves their roles in the company, breaching codes. The three men and many other directors are questioned regarding their independence due to their share options. Michael O’Leary’s salary has also been questioned by shareholders, with Michael responding, “My view of shareholders voting against my pay package is: if you don’t like it, don’t vote against it — sell your shares and f**k off.
” Not showing good corporate governance. Customers were affected when an average of 50 flights a day had to be cancelled over 6 weeks, affecting over 350,000 customers. This was due to pilots not getting their holidays and having to take 4 weeks off. Pilots also collective bargain over salaries and want them increased.