QANTAS: ‘Explosive’ review of the board. Alan Joyce to lose AU$9.3 million bonus

Today two reports were released by Qantas. The first is the determination of Executive Remuneration. The more colloquial expression is how much pay gets ‘docked’ from former CEO Alan Joyce’s pay packet.

The second is the scathing review of Board governance during the latter years of Joyce’s reign at Qantas. Reign appears to be what it was. The board and senior executives left all control with the emperor like Joyce. The SMH calls him ‘little Napoleon’ in a ‘command and control’ culture. Ouch!

Remuneration – Alan Joyce to lose bonus payment

Alan Joyce during his time at Qantas received a complicated pay packet including base pay, incentives and bonuses. Some of the many components were tied to the performance of the company’s share price over time. The topline takeout of the report is that Alan Joyce is to lose AU$9.26 million of his bonus pay.

But for shareholders and customers, it might stick in their craw that he will still get an AU$1.8 million bonus making a total of AU$14.9 million in pay for 2023!

The Executive team will also lose 33% of the bonuses they would have been entitled to. That includes the current CEO, Vanessa Hudson.

Qantas is stretching its powers in its ability to suspend these payments, legitimately earned under the board-approved remuneration package. It has probably been a careful balancing act between finding an amount that will satisfy the shareholders and customers, but not be so significant as to invite a legal challenge.

We will need to wait to see if this time the board has got it right.

Command and Control

The review of board governance is more concerning than just the issue of money. It is scathing about the board allowing the Qantas CEO, Alan Joyce to rule the corporate roost.

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

Qantas Governance Review Report

Undoubtedly Joyce in many respects was a talented CEO. He gave Qantas a successful Jetstar and boosted the loyalty scheme into an income-generating behemoth. He prevented the airline from going bankrupt during COVID-19. And his final success – yet to be played out could be the nonstop intercontinental flights of ‘Project Sunrise.

The issue is, that the Chair and board and senior executives did not challenge his decisions. They allowed a top-down approach to prevail unchallenged. Those people, unnamed in the governance report need to be held to account.

Some already are. Joyce fell on his sword when the reputational damage to Qantas of some of his decisions – firing ground staff and selling already cancelled flights became untenable. Chair Richard Goyder has taken the early flight out of his position too, for allowing this behaviour on his watch. However several have not taken responsibility for their lack of oversight or ability to challenge.

New CEO Vanesa Hudson was there too. She is forgiven because, in her short tenure, she has already changed the culture at the airline. Todd Sampson was narrowly successful in a shareholder vote against reappointment. Belinda Hutchinson remains on the board. Both would have signed off on this damning report of their board’s oversight. Former Qantas directors Maxine Brenner and Jacqueline Hey have already departed.

2PAXfly Takeout

There is a lesson here for all boards. Just because your CEO is making shareholders money, does not mean that a company is running well. It’s also no reason to stop doing your job of oversight.

Reputational damage is a significant threat to a company’s success. Just ask PwC over the tax advice scandal, or indeed Qantas for selling flights that had already been cancelled.

Board members are well paid with cash an perks at Qantas. They need to do their job.