Aer Lingus Chief Executive Dermot Mannion and Chief Financial Officer Sean Coyle have requested that a controversial condition be removed from their contracts.
The clause entitled them to compensation in the event of constructive dismissal in the event of a takeover.
The airline said the decision was taken to prevent the issue becoming a distraction from the task of ensuring that Aer Lingus maintains independence.
Mr Mannion said: 'We have no hesitation in terminating this condition with immediate effect in order to focus our attention on defeating the unsolicited bid from Ryanair, which fundamentally undervalues Aer Lingus and is incapable of completion.'
Aer Lingus Chairman Colm Barrington thanked Mr Mannion and Mr Coyle for their 'decisive action'.
Mr Mannion had stood to gain up to €2.8m if the airline was taken over.
Ryanair Chief Executive Michael O'Leary derided Mr Mannion's potential payment as a failure fee.
Minister for Transport Noel Dempsey who had been opposed to the payments, said this was the right decision.
