Former Qantas chief executive Alan Joyce’s multi-million-dollar payout reduced by almost $10 million

by Admin
August 7, 2024

Former Qantas chief executive Alan Joyce’s multi-million-dollar payout reduced by almost million

Qantas has reduced former chief executive Alan Joyce’s multi-million-dollar payout by almost $10 million.

In a statement shared to the Australian Securities Exchange, Qantas confirmed Mr Joyce’s executive pay would be slashed after the airline lost its High Court battle over the illegal sacking of ground staff in 2020 and a recent settlement with the Australian Competition and Consumer Commission (ACCC) over flight cancellations.

Mr Joyce’s remuneration, which includes his salary and shares worth about $23.6 million at the time of his resignation from Qantas last year, will be docked by $9.26 million.

As part of that package, $14.4 million was at risk of being clawed back by the airline’s board. Of this, $8.3 million was attributed to long-term bonuses, $3.9 million was connected to pro-rata business outcomes, and the remaining $2.2 million was withheld as per the Qantas board’s decision while the ACCC action was pending.

The decision by the airline’s board, announced on Thursday, means Mr Joyce will still receive more than $12 million for his time at the airline in the 2023 financial year.

The statement lays outs that he will lose $8.36 million worth of Qantas shares, based on its current share price, while his short-term incentive bonus has also been cut by 33 per cent to $900,000.

Mr Joyce left Qantas in September last year after a 15-year career which saw him earn a total salary package of $125 million.

Vanessa Hudson took over as his replacement.

“The events that damaged Qantas and its reputation and caused considerable harm to relationships with customers, employees and other stakeholders were due to a number of factors,” the statement said.

“While there were no findings of deliberate wrongdoing, the review found that mistakes were made by the board and management which contributed to [Qantas’] significant reputational and customer service issues.”

Qantas docks bonuses for other senior executives

The Qantas board will also dock the short-term bonuses for current and former senior executives by 33 per cent.

Qantas says mistakes by its board and management contributed to its reputational crisis.(ABC News: Andrew O’Connor)

“Inclusive of Mr Joyce’s reduction, the overall reduction in the FY23 short term incentives is approximately $4.1 million,” the statement said.

“In reaching these decisions, the board has considered the individual and collective accountability of members of the Group Management Committee.

“The Board has also taken into account their performance in bringing Qantas through the pandemic and the challenges of standing up the airline through that period.”

Further details about the changes to the airline’s executive remuneration packages will be included in Qantas’ annual report, which will be released later this year.

Qantas will release its full-year financial results on August 29.

At its annual general meeting last November, discontent amongst Qantas shareholders saw them deliver a significant protest vote against the board’s plan to compensate its executives.

More than 80 per cent of Qantas shareholders voted against the proposal — one of the largest in Australian corporate history — and delivered a “first strike” against the board.

In response to the protest vote, Mr Goyder said it sent “a very clear message from shareholders”.

The protest vote effectively put Qantas’ management on notice to either improve its performance by its next AGM, or risk a second strike and the potential spilling of the board.

Qantas CEO Vanessa Hudson speaks at the company’s 2023 AGM.(
ABC News: Nassim Khadem
)

Decision follows review of airline’s governance

The decision to dock Mr Joyce’s pay follows a review of the airline’s governance, which started in October 2023 after a turbulent 12 months.

“The review … scrutinised the decision-making and governance processes of the board that led to the loss of trust amongst stakeholders,” Qantas said in a separate statement.

“The review found that mistakes were made by the board and management which contributed to the group’s significant reputational and customer service issues. There were no findings of deliberate wrongdoing.”

The full review contained 32 recommendations, including:

More detailed reporting to the Qantas board on customer metrics, employee engagement and key stakeholder relations
Changes to Qantas’ remuneration framework
Stricter protocols for the approval of share trading by Qantas’ CEO and senior management
Greater consultation with the Qantas board, with “approval required for involvement in significant stakeholder and community issues”

Outgoing Qantas chair Richard Goyder and chairman-elect John Mullen “have committed to implementing actions to address”, with the support of Qantas’ management.

Mr Mullen said it was important “the board understands what went wrong and learns from the mistakes of the past”.

“It’s clear that we let Australians down,” he said in a statement.

“As the national carrier it is our duty to make sure we always act in the best interest of stakeholders and hold ourselves to the highest level of accountability.

“Vanessa and her new management team have made positive progress towards delivering better outcomes for customers and employees, but there is still a significant amount of work to be done to rebuild the trust of all stakeholders.”

A culture of ‘command and control’

The 19-page governance report, authored by independent advisor Tom Saar, was critical of the company’s leadership style, describing it as “top-down leadership with a dominant and trusted CEO, leading to insufficient listening and low speak up”.

“Leadership culture is part of the root cause dynamic that has underpinned the events under review,” the report said.

“The Group had a ‘command and control’ leadership style with centralised decisions and an experienced and dominant CEO.

“This contributed to a top-down culture, which impacted empowerment and a willingness to challenge or ‘speak up’ on issues or decisions of concern except in relation to safety matters.

“In turn, that cultural characteristic underpinned some of the events that affected [Qantas’] reputation.”

Mr Saar’s report also critiqued managerial decisions at the airline during the COVID-19 pandemic, stating that Qantas’ leadership culture “contributed at times to a focus on financial performance before stakeholders and non-financial risks”, other than safety.

“There was too much deference to a long-tenured CEO who had endured and overcome multiple past operational and financial crises,” it said.

“The mode of engagement between the Board and Management did not always facilitate robust challenge on some issues.

“Issues could have been brought to the Board earlier for input and reporting could have included more analysis of options and risks for Board debate.”

The report concludes with Qantas’ board stating that it takes “full accountability for the events which damaged the trust” placed in the airline, and is working to implement the recommendations made in the review.

“We are committed to the changes to structures, policies, practices, behaviours and people that we are implementing to recover and sustain our high-quality reputation with all of our stakeholders,” the company wrote.

“Many of the actions are already in place and making a difference and the rest are underway.

“However, we won’t stop here and are committed to continuous improvement to rebuild the trust of our stakeholders and restoring pride in Qantas as the national carrier.”

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Posted 5 hours agoWed 7 Aug 2024 at 11:00pm, updated 3 hours agoThu 8 Aug 2024 at 1:24am