Deano, your hypothetical CEO may have made a paper profit that looked good for that year, but what did he do to achieve it? Did he sack 20% of the workforce, and delay future long-term investment? Sell some key assets and lease them back? Write down assets as an accounting trick? Buy back shares? That's what happens when you put someone on a short term or even medium term bonus scheme. How will your hypothetical Company look in a few years time when your legend CEO is soaking in rays in the Carribean and you suddenly realise your Company is in ruins because of lack of long term planning and investment. All the good staff have taken VR packages and joined the opposition together with their corporate knowledge, and investment for the future delayed.
AJ has his departure date planned, and he has structured is so-called "turn-around" accordingly. He will be long gone when it bites. And the new CEO will pick up the pieces and the cycle will begin again.
Airlines are like farming. Cycles happen. You need to take the good years to reinvest for the bad. Did AJ invest in the future with his surplus dollars? No, he used the money to buy back shares, further boosting the share price, upon which his bonus is based. Does AJ care what Qantas will look like in 10 years' time? Of course not. He won't be here and his remuneration contract doesn't factor that in either. That's the problem, right there.
Did you notice a few years ago when the airline was struggling the board changed the short term executive bonus scheme into a "long term" bonus scheme (really? 3 years is long term in an airline?). If that wasn't a red wine deal for the senior execs I don't know what is.
Qantas is currently cancelling flights due lack of crew. Everyone in Qantas was telling AJ a couple of years ago to employ and train crew, but he refused to do so because he had to make an "amazing profit", because that was the way his financial reward was structured. The airline is now suffering for it. That is why QF is only taking it's first 787 next month. That is why QF hasn't ordered any 777X's. If Qantas had ordered any more aircraft in the last couple of years that would have reduced the share price and hence AJ's bonus. ****, you don't need a degree in Commerce to see what's going on.
The amazing Emirates deal didn't work. He's just backed out of it. And he is rewarded $25M for that. Frontline troops are starting to say "WTF". He'll go soon, and quite happy. $25M happy.
The "doom and gloom" rhetoric will start again as soon as the next pilot EBA meeting commences.
If I wanted to sell my house, and offered the estate agent 10% of every dollar he gets over $800,000, then that will make him work hard to get me a good price. Fine. But sorry, that doesn't work in an airline.