Select Page

QANTAS: Will the board let ex-CEO Alan Joyce get his AU$23.6 million payout?

QANTAS: Will the board let ex-CEO Alan Joyce get his AU$23.6 million payout?

Qantas released its annual report for the financial year 2023 yesterday. We already know that they made a stonking AU$1.5 billion plus profit. Everyone is concentrating on, including the Qantas Group Board, is its discretion on executive remuneration.


With a growing list of scandals, should the executive team, including past CEO Alan Joyce, hang on to their bonuses?

The executive team has a large number of red crosses against their performance. Let’s start with the Australian Competition and Consumer Commission prosecuting Qantas for selling cancelled flights. Next, consider the cost of the two lost appeals against the Federal Court ruling on the illegal sacking of ground workers. Or, you could choose the destruction of the airline’s reputation through cancelled and delayed flights and lost and misplaced luggage. Then there is always the exorbitant money-grabbing cost of flights at the moment and in the recent past. And, finally (perhaps), there is the designed difficulties there are in gaining refunds for cancelled flights due to COVID-19.

All of those add up to very good reasons to curtail the bonuses due to executives. Massive profits as a KPI do not trump all of the other failures. Or does it in the eyes of the board?

Proposed new First Class on Project Sunrise A350s [Qantas]
Proposed new First Class on Project Sunrise A350s [Qantas]

Board’s discretion over executive bonuses

I always have a hard time seeing why executives should get a bonus for doing what they are already paid handsomely to do. But let’s move on because that is a whole other argument.

The board uses a ‘scorecard’ to determine short term executive bonus, or ‘incentive’ payments. The criteria includes:

  • Financial performance
  • Safety
  • Customer satisfaction
  • Punctuality
  • Emissions reduction

By listing it this way, the Qantas board can say that executives delivered on four out of five. They done good on financial performance, safety and emissions reduction. My response is that getting some extra lolly for a 3% emissions reduction is just setting the bar far too low. I have to laugh about the on time performance, which is not measured in absolute terms, but in comparative terms:

‘Qantas was more punctual than its major domestic competitor for 11 out of 12 months.’

Qantas Media Statement on Qantas Group Annual Report
Paddy Bedford's Mendoowoorrji livery on Qantas 737-800 [Schuetz]
Paddy Bedford’s Mendoowoorrji livery on Qantas 737-800, Alice Springs Airport 2022 [Schuetz]

Customer satisfaction

The Qantas statement is a little more forthright on the satisfaction of customers:

‘While customer satisfaction levels improved during the year, they are well below where they should be. As a result, this part of the scorecard was judged at zero out of a possible 20 per cent and this had a corresponding impact on senior executive pay.’

Qantas Media Statement on Qantas Group Annual Report

OK, that’s more like it. But actually, hold on. Shouldn’t they not only not get paid for something they should have achieved, but shouldn’t they also get a fine for doing a bad job? I mean, they not only didn’t retain or improve the reputation of the airline, the completely fucked it. A reputation that has been multiple decades in the making.

Am I wrong?

To give the board their due, they have given executives a slap, but also reduced short-term incentives for senior executives by 20% ‘…in recognition of the customer and brand impact of cumulative events.’

ACCC prosecution

The Board is also going to hold back on paying the remaining 80% of the short-term incentives until the outcome of the legal case is known.

‘There are already clawback provisions on significant amounts of remuneration awarded but not yet released that would be used if significant misconduct was ultimately found.’

Qantas Media Statement on Qantas Group Annual Report

I hope that if the prosecution is successful, executives get no bonus.

a man in a suit and tie
Alan Joyce addressing the public on flight credit deadline extension [Qantas]

Alan Joyce payout

The board is holding onto AU$2.2 million in short-term bonuses. There is AU8.3 million (out of AU$21.4 million) that the board can clawback if they determine it ‘necessary‘.

That’s not the end of it. There is an additional total of AU14.4 million of long-term incentives that the board can get back, or in their terms:

‘…subject to malus and clawback if considered necessary.’

Qantas Media Statement on Qantas Group Annual Report

I expect what is ‘considered necessary’ will be hotly debated at the Annual General Meeting in Melbourne on 3 November 2023.

Sydney Qantas First Lounge, 2022 [Schuetz/2PAXfly
Foyer, Sydney Qantas First Lounge, 2022 [Schuetz/2PAXfly]

2PAXfly Takeout

The consensus is that this withholding of bonuses or incentive payments is too little, too late. However, it should be remembered that 90% of shareholders voted in favour of the remuneration report at last years AGM.

Let’s hope that 25% of shareholders don’t support the remuneration report, which would be the first step to trigger a spill of the whole board. Under Australian company law, you need two votes in successive years with 25% or greater vote against the remuneration report to bring on such a spill.

The AFR is reporting that various of Qantas major investors are unhappy about how remuneration has been handled, including the Chairman approving the sale by Alan Joyce of AU$17 million of Qantas shares on 1 June.

My view is that the board should withhold all bonus payments until the conclusion of the ACCC’s case regarding the sale of 8,000 flights that were already cancelled and the conclusions of compensation and penalty negotiations with the 1,700 sacked ground handling staff. The latter could conceivably be resolved prior to the AGM, but I doubt that the ACCC’s case will move that quickly.

The legacy reputational damage of these two legal battles are going to stay around for some time I fear.

Leave a reply

Your email address will not be published. Required fields are marked *



Previously . . .

Subscribe to the Newsletter

Join our mailing list to receive regular updates about 2PAXfly.

Reviews, deals, offers, and most of all opinion will be in your inbox.

We won't spam you, and we won't share your details with others.

Newsletter Regularity

You have Successfully Subscribed!