The gift that just keeps on giving.
QANTAS STAFF FUME AT PROSPECT OF AN EXTRA $6.1M JOYCE BONUS
Tansy HarcourtQantas staff have become increasingly furious that former Qantas chief executive Alan Joyce is in line for a further $6.1m pay cheque under so-called long-term incentive bonuses – on top of the $21.4m he’s already gearing up to receive.
The former boss of the nation’s biggest airline will leave with more than $28m, taking his total tally to more than $150m for 15 years in the captain’s seat.
During this period, the airline cut a quarter of its staff and was found to have illegally fired 1700 of them.
“It just became all about the money for Alan,” said one very senior former Qantas executive of his peer’s motivations. “I still can’t believe how much he changed as a person.”
To put it in perspective, Qantas paid $1.3bn in dividends over the 15-year period, meaning Mr Joyce has pocketed 12 per cent of the overall payout tally for himself.
Qantas has suffered an unprecedented breakdown in reputation over the past two years following a litany of failures including cancelled and late flights, difficult-to-use credits vouchers, lost bags, illegally firing staff and allegedly selling tickets on already cancelled services. To top it all off, the board approved Mr Joyce selling $17m of shares when he knew (but the market didn’t) that the airline was being investigated.
The airline is the competition watchdog’s most complained about company for the second year running and, just this week, it topped the list for least-on-time *departures, even underperforming its own low-cost unit, Jetstar.
In announcing the 83 per cent vote against its remuneration *report, Qantas chairman Richard Goyder conceded it was “obviously a very clear message from shareholders”, but still didn’t clarify that the correct figure to be cited should not have been $21.4m but actually closer to $28m, *including the long-term bonuses.
The extra $6.1m Mr Joyce stands to receive and the millions of dollars that Andrew David, the former CEO of Qantas Domestic and the frontman for the illegal firing of Qantas baggage handlers, is set to receive also raises a bigger question of why companies are so opaque about continued bonus payments to former staff after they leave.
Australian Shareholders Association CEO Rachel Waterhouse said that companies needed to be clear about how much money in bonuses former executives stood to take from firms after they left.
“It needs to be transparent,” Ms Waterhouse said. “It’s an issue that shareholders are actively voting against at the moment.”
In the case of Qantas, the board did elect to trim 20 per cent from Mr Joyce’s payout, taking it down to the widely publicised $21.4m, and the company points out that it is yet to pay out the bonus portion of that figure, citing clawback provisions.
This same clawback would apply to the additional $6.1m long-term bonus but only if the board is able to legally prove that he acted with misconduct. Most believe this will be unlikely.
Ms Waterhouse said the ASA was in favour of expanding “the clawback and malus clauses so that the company is not completely reliant on proving misconduct should management decisions cause risk or loss”.
Another shareholder questioned the whole premise of why a top executive would continue to receive their long-term incentive bonus at all upon leaving, given they would already receive their short-term incentive bonus and their *salary for a set period of time when they could not work elsewhere.
However Dean Paatsch, a proxy and governance risk adviser from Ownership Matters, said it was still better for executives to have their bonuses tied up with long-term performance rather than short.
“I’m a big supporter of long-term incentives if shareholders get rich, as I say, it beats the *alternative for people that paid out in cash, and get to laugh in the face of declining shareholder experience.”
He added that it “stops someone staying around well beyond their use-by date”.
In the case of Qantas and Alan Joyce, some people may disagree.
It’s no wonder the usually outspoken Irishman remains in Dublin, spending time with his elderly mother to be sure, but also far away from *intrusive questions about why he should be paid almost $28m when he has left the airline in a mess on all measures apart from profit.