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AJ announces $90M QF staff bonus

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AJ announces $90M QF staff bonus

Old 14th Jul 2015, 09:12
  #21 (permalink)  
 
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Game, set and match to Derfred.
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Old 19th Sep 2017, 09:41
  #22 (permalink)  
 
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Sorry to bring up old thread. But was it included in EBA's this pay freeze (can't find it mentioned in the EBA's I'm looking at on the fair work website) clause or agreeded to after. Is there a reference to when this was agreed and when it finishes. Link?
Cheers
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Old 19th Sep 2017, 11:18
  #23 (permalink)  
 
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Are you telling me I just read a whole page about somebody's bonuses and it's 2 years old??!!
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Old 19th Sep 2017, 11:54
  #24 (permalink)  
 
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So Joyce gets $25 million for the biggest smoke and mirror turnaround in corporate history.
To temper the employee criticism, everyone gets a bonus.
After a pay freeze costing staff many thousands of dollars, is this pittance enough to make up for the losses?
In my view, not by a long shot!
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Old 23rd Sep 2017, 20:38
  #25 (permalink)  
 
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Yes Joyce got lucky with a fuel price drop.
They also 'impaired' on overvalued international fleet, saving on depreciation and generating the 'turnaround' profit the next year. Using the 'loss' as the pretext to lock in pay freezes for the employees.

  • In the US, the ratio of CEO remuneration to average worker earnings has grown from 30 odd times in the mid 1970's to 300 times now. The UK is 183 times. Australia is well up there too.
  • The drift away in return away from workers has gone unabated for three decades in Australia. Both sides of the political spectrum allows this in all western democracies.
There is also a trend very important to watch as far as Joyce's remuneration is concerned: Realised pay. Executive remuneration is increasingly 'hidden' in bonus structures.The effect of options on Qantas shares vesting when events are 'timed' to maximise the share price, does reward insiders handsomely. The cynical might suggest that Qantas' fleet write down was timed with share option considerations in mind..


Throwing the staff a few crumbs from the table is insignificant, the savings baked in when union myopically agreed to a pay freeze (for a paper loss) are realised and the pay and superannuation accumulations long ago lost.
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Old 24th Sep 2017, 23:16
  #26 (permalink)  
 
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AJ's bonus has not gone unnoticed by the crew. Less are willing to help out these days, good luck crewing the jets in the school holidays, flight ops are already asking for extra help before the school holidays started.
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Old 25th Sep 2017, 03:22
  #27 (permalink)  
 
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Realised pay. Executive remuneration is increasingly 'hidden' in bonus structures.The effect of options on Qantas shares vesting when events are 'timed' to maximise the share price, does reward insiders handsomely. The cynical might suggest that Qantas' fleet write down was timed with share option considerations in mind..
Surely that's insider trading in another guise....
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Old 25th Sep 2017, 06:47
  #28 (permalink)  
 
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Originally Posted by angryrat View Post
AJ's bonus has not gone unnoticed by the crew. Less are willing to help out these days, good luck crewing the jets in the school holidays, flight ops are already asking for extra help before the school holidays started.
Similar story across the road with Mussolini's crews.
At least QF made a profit to sort of justify executive bonuses.
Virgin chief John Borghetti's pay takes off after getting cash under control
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Old 25th Sep 2017, 09:38
  #29 (permalink)  
 
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This may not go down well but.....

Let's say I owned and ran a business that turned over $100 million and it saw a profit of $5 million per year
Then I needed to step down from running the business and gave the job of running it to someone
This person asks for just $100k as a wage plus 10% of any profit over $5 million
He then turns a profit of $20 million
His pay is now $100k + $1.5 million
He has made me an extra $8.5 million through good business decisions

As the owner of the business I am very happy with this deal, but workers are jealous of his pay
Although workers may be conscientious, reliable and hard working, none alone can make this kind of financial impact
Some may well have good ideas, but none have the qualifications to RUN THE BUSINESS
In the airline industry many workers elected to train to become pilots, cabin crew, engineers, baggage handlers, admin etc but none decided to train in business management, move through the ranks, back themselves and become talented to become the CEO where your employment is guaranteed only as long as you are performing, one bad decision or poor result can see you terminated

With risk comes reward for a CEO

A pilot, for example, does not have these risks
Fly your sector
Address and issues that come up along the way
Don't f__k things up and you have a job to go to

If the CEO gets it very wrong, all the pilots could be out of a job

Better for pilots if the CEO earns multi millions because the airline is sound and profitable and you get to keep your job for a long time

Just look what happened to Ansett, whilst there is more to that story than a bad CEO, the result is the same, much pain and heartache for the workers and creditors
No one wants to see that happen again...............
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Old 25th Sep 2017, 09:49
  #30 (permalink)  
 
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Surely that's insider trading in another guise....
Of course, but regulation is always' a day late and a dollar short'! Is that by design?

Insider trading actually refers to information asymmetry. Put simply, an 'insider' knows something that an outsider does, executes a trade either way to profit on the asymmetry. The market is 'assumed' to adhere to the efficient market hypothesis, which is enshrined in s674 of your Corporations Act 2001, also in the ASX listing rules 3.1. The idea is everyone has access to the same information. Then again ASX/NYSE companies have 'confidential briefings' for some investors..

Of course, the SEC and ASIC insist that insider trading is 'vigourously prosecuted' and may net a few. The interesting thing is that an option with a vesting date is a known well in advance, and something like a fleet impairment just an amazing coincidence, agreed to by auditors and senior management.

People I know looking at airlines always were curious as to the Balance sheet values of aircraft. I would suspect the Etihad write down of the A380 to effectively zero will be mirrored by a QAN CEO in years to come. Hopefully Joyce leaves that next opportunity for a big loss, depreciation change and probably pay freezes on helpless employees, to the new guy.

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Old 25th Sep 2017, 09:57
  #31 (permalink)  
 
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Dean you are completely correct.

A pilot has complete and utter responsibility for their conduct. The CAO enshrines strict liability.

Qantas' profit, particularly the amazing turnaround was effectively ONLY fuel and a depreciation adjustment. The 'loss' was on paper, not a trading loss but even generated tax credits!

That is not 'enlightened leadership', clever perhaps, but students of the corporation know the difference.

Hudson Fysh, Paul McGuiness and Fergus were inspired leadership. The took something; an idea and leveraged their own money. Like him or not Richard Branson did the same thing with Virgin Atlantic. Alan is welcome to the money, he may even need it, but to call him accountable for the direction,both good and bad is a little bit of a stretch.
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Old 25th Sep 2017, 10:01
  #32 (permalink)  
 
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Perhaps it's just unfortunate that, apart from continued employment, few else outside of the ivory tower have benefited from the oil price and fleet writedown decisions. In fact, the workers have paid and sacrificed for the excesses now enjoyed by the execs.

Last edited by crosscutter; 25th Sep 2017 at 10:16.
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Old 25th Sep 2017, 10:05
  #33 (permalink)  
 
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I think that at some point the sense of entitlement of CEO's and Execs has to be curtailed and this latest example shows why that needs to be done. They get paid and paid well to do their jobs and maybe they are entitled to some credit for achieving over and beyond normal results, but this is financial engineering at its worst.
If you do not agree with that, why weren't they all sacked when they tried to get the govt to bail them out?
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Old 25th Sep 2017, 10:33
  #34 (permalink)  
 
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Originally Posted by ohallen View Post
If you do not agree with that, why weren't they all sacked when they tried to get the govt to bail them out?
That was more about a level playing field and tax cuts to address it
A fair request that was largely ignored by the Abbott government

Does a Qantas pilot get the same pay as a pilot flying for a Chinese airline, or cabin crew etc ?
Does a Chinese or Singaporean airline pay as much tax as Qantas ?
Does Qantas pay as much for fuel as Emirates ?
Does Emirates need to make as large a profit as Qantas pro-rata ?

If an airline is located in a country that has lower wages or taxes than Qantas, then they have an unfair advantage which, left unaddressed, will see Qantas unable to compete or survive on flights between those 2 countries

Is this why Qantas has only a few flights per day to China verses Chinese airlines that have dozens
Is this why Qantas does not fly to India ?
Is this why ME3 and Asian airlines dominate the Roo Route ?

With this type of competition there are only 3 choices
1) Surrender routes to airlines with a low cost base (TICK)
2) Ask government for tax relief to get closer to a level playing field (TICK) but denied
3) Restructure and and reduce costs to compete (TICK)
Improve fleet utilization
Reign in growth on domestic routes ahead of growth
Reduce staff costs
Reduce staff levels
Outsource where possible for cost savings

Become lean and agile

The write down was not much more than a reality check as to where Qantas was heading if it continued to do nothing

Yes it was a big loss on paper, but the last 2 years of record profits have not only wiped out the loss, but saw 3 year profits (including the 1 year loss) exceeding any other 3 years profits in the history of Qantas

So Joyce must be doing something right
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Old 25th Sep 2017, 10:46
  #35 (permalink)  
 
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Deano969, your hypothetical CEO in the scenario you described may well deserve his bonus but I can't see any parallel to Alan Joyce.

In 2008 under Geoff Dixon Qantas made $970 million profit after tax. Alan took over as CEO in November 2008.

In 2017 Qantas made $853 million profit after tax. So profit has fallen under his leadership.

And how could we forget, in 2014 Qantas LOST $2.8 BILLION after tax. Under Alan's "leadership".

In 2007 Qantas was valued at over $11 Billion. The market capitalisation today is $9.88 Billion.

I can't see the value he has brought. I certainly can't see how you can justify a $25 million pay packet. To drive a profitable company into the ground, ask the government to bail you out and then bring it back to where it was when you first took over, is not my definition of masterful management. To use the 2014 share price as the benchmark to judge his 2017 pay should be criminal.
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Old 25th Sep 2017, 11:49
  #36 (permalink)  
 
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In 2008 under Geoff Dixon Qantas made $970 million profit after tax. Alan took over as CEO in November 2008
Dixon left Joyce with a really poisonous chalice. Neither he nor Strong took one difficult decision.
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Old 25th Sep 2017, 16:31
  #37 (permalink)  
 
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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. Shit, 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.
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Old 25th Sep 2017, 16:53
  #38 (permalink)  
 
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The QANTAS CEO's pay went from
$4m to $12m to $13m to $25m thru 2014, 2015, 2016, 2017 FYs.

Total pay over four years $54m. When he goes he will have taken substantially more than $25m in reward.

Reasonable? You be the judge.
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Old 25th Sep 2017, 20:41
  #39 (permalink)  
 
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Total pay over four years $54m. When he goes he will have taken substantially more than $25m in reward.
One must consider the time value of money.

Qantas group Revenue in FY10
  • AUD$13.7 billion
Qantas group Revenue in FY17
  • AUD$16.05 billion


If one merely uses a 3% Interest (or inflation rate) Qantas is in real not nominal terms 5% lower.



Making a business 'lean' isn't something spectacular, it is akin to a pilot taking sufficient fuel. The fleet write down could have been done anytime in the last five years, it was done specifically when it was for reasons (IMO) other than a desire to make the business lean.







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

Executive remuneration in Europe and the USA is under the spotlight. Both in the UK and the USA their respective Company Codes require realised remuneration to be compared average earnings. Not suprsingly the division of the economic pie has seen few people take more, whilst the majority don't. Milton Friedman and the Chicago school of economics is credited for helping CEO pay go from around 30 times average earnings to presently 335 times by linking remuneration to financial performance. Switching realised salary away from STI to 'long term' with big awards of bonus for 'financial performance' both hides the ratio to average pay (for comparison purposes) and entices financial engineering.
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Old 26th Sep 2017, 11:31
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Originally Posted by Chronic Snoozer View Post
The QANTAS CEO's pay went from
$4m to $12m to $13m to $25m thru 2014, 2015, 2016, 2017 FYs.

Total pay over four years $54m. When he goes he will have taken substantially more than $25m in reward.

Reasonable? You be the judge.
Don't forget all of the managers collecting their "well earned" bonuses blindly chasing pointless KPIs. None of the managers think beyond their next performance review. Not only is there a shortage of crew, the training dept's are short of instructors and have limited capacity to train additional instructors. This is the result of short sighted management.
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