Qantas plans to claw back big incentive payments to former chief executive Alan Joyce after a governance review concluded there had been “too much deference to a long-tenured CEO”.
Qantas plans to claw back $9.3 million of incentive payments to former chief executive Alan Joyce after a governance review concluded there had been “too much deference to a long-tenured CEO”.
Mr Joyce’s total remuneration during his final year with the airline was worth $23.6 million, making him one of Australia’s highest-paid executives.
Qantas has decided to not issue $8.36 million of shares, which had been due to Mr Joyce under a long-term bonus scheme.
His short-term incentive bonus has also been cut by 33 per cent, or $900,000.
In addition, the Qantas board had previously agreed to withhold $2.2 million in bonuses from Mr Joyce.
The decisions mean Mr Joyce will still have earned about $12 million during his final tumultuous year with the airline.
That year saw the airline lose its High Court battle over the illegal sacking of 1,700 ground staff in 2020.
It also paid $120 million to settle the Australian Competition and Consumer Commission’s lawsuit against the airline for selling seats on flights that had already been cancelled.
Mr Joyce left Qantas in September last year after a 15-year career and was replaced by Vanessa Hudson.
Qantas said the base fees paid to non-executive directors will also be cut by 33 per cent as will the short-term bonuses of other senior executives.
"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."
The board’s decisions come after a large protest vote at last year’s annual general meeting.
Then chairman Richard Goyder said it sent "a very clear message from shareholders".
The decision to dock Mr Joyce's pay follows a review of the airline's governance.
"The review found that mistakes were made by the board and management which contributed to the group's significant reputational and customer service issues,” it found.
“There were no findings of deliberate wrongdoing."
The governance review, led by Tom Saar, was critical of the company's leadership style and culture.
"The group had a 'command and control' leadership style with centralised decisions and an experienced and dominant CEO,” it stated.
"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 the group’s reputation."
Mr Saar's report found that Qantas' leadership culture "contributed at times to a focus on financial performance before stakeholders and non-financial risks".
"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 review made 32 recommendations, including more detailed reporting to the board on customer metrics, employee engagement and key stakeholder relations.
It also called for changes to Qantas' remuneration framework and stricter protocols for the approval of share trading by the CEO and senior management.
That was after Mr Joyce sold $17 million worth of shares, almost all of his holding, in June 2023, creating significant disquiet among investors.
Mr Goyder and chairman-elect John Mullen said they have committed to implementing actions to address the issues.
"It's clear that we let Australians down," Mr Mullen 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."
