Former Qantas CEO Alan Joyce has been paid $21.4m for his final full year in charge, despite stepping down early amid a reputational crisis that saw the airline suffer an “acute loss of trust from the community”.
The pay could have been higher, with the airline withholding bonuses and flagging that it might try to retrieve a total of $14.4m in additional remuneration Joyce was in line for as the board considers clawback provisions over various sagas, Qantas revealed as it released its 2022-23 annual report on Wednesday.
The airline cut short-term incentives for senior executives, which includes new chief Vanessa Hudson, by 20% in response to the recent dents in Qantas’s reputation. A component of bonus calculations tied to customer satisfaction was also wound down to zero.
“In the case of Alan Joyce’s remuneration for FY23, in addition to $2.2 million in short-term bonuses that have been withheld, a further $8.3 million of a total adjusted $21.4 million is subject to clawback should the board determine that necessary,” the board’s chairman, Richard Goyder, said in a statement.
“When combined with additional long-term incentives already granted, a total of $14.4 million is subject to malus and clawback if considered necessary,” Goyder said.
The extent of Joyce’s pay packet has come under intense scrutiny in recent weeks, as the airline was hit with a series of sagas that saw him bring forward his retirement as CEO.
In addition to customer fury over withheld credits, poor service and high airfares, Qantas faces hundreds of millions in penalties over legal action from the consumer watchdog alleging the airline sold tickets to thousands of flights it had already cancelled.
Fresh to the job, Hudson is also facing another mammoth compensation bill in the hundreds of millions after the airline failed to overturn a ruling that it had illegally outsourced 1,700 ground handlers in 2020.
Goyder noted the company’s annual performance “was positive in many respects” – it posted a record $2.47bn profit last month – but addressed the reputational crisis the airline finds itself in.
“The company is experiencing an acute loss of trust from the community, and accumulated disappointment from customers, which the board and management are determined to fix,” he said.
Goyder said “much of the loss of trust stems from allegations by the ACCC” which “only crystallised into material allegations when legal action was announced” late last month.
“These allegations are concerning and have the board’s full attention,” he said.
Goyder’s position as Qantas chairman has come under criticism in recent weeks over the executive behaviour he oversaw in recent years. While he said on Wednesday “there must be accountability” for unlawful behaviour from the airline, he did not address speculation about his chairmanship.
“On any matter, management and the board only take a course of action if they believe it’s lawful. However, we also accept that there must be accountability where those actions are found to be otherwise, and we will work through these and other issues with relevant stakeholders.”
Qantas noted its internal metrics for executive performance – rated on a scorecard taking into account safety, emissions and other factors – judged customer satisfaction “at zero out of a possible 20%”.
The board will withhold the balance of short-term incentives from the past financial year for senior executives while the ACCC matter progresses. Next financial year, customer satisfaction outcomes will have a greater weight when determining executive bonuses.
“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,” Goyder said.
On 1 September, the day after the competition regulator launched federal court action alleging Qantas sold tickets to thousands of already cancelled flights, the airline revealed Joyce had been issued 1.74m shares.
The shares were valued at more than $10m under long-term incentive plans and a recovery retention plan.
Governance expert Vas Kolesnikoff said it was too early to tell how serious the board was about its threat to recoup past bonus payments from Joyce.
“It’s headed in the right direction, but that doesn’t mean it’s perfect,” said Kolesnikoff.
He said it was also concerning that the company allowed Joyce to cash in a large shareholding this year, an issue that will likely be scrutinised at the airline’s annual general meeting in November.
Shortly after Qantas announced the share reward, Joyce pulled forward his retirement, and immediately exited the airline as pressure mounted.
