The Qantas Group has issued a statement following the release of the Group’s FY23 financial report. The release comes in the wake of a string of recent controversies which saw outgoing Group CEO Alan Joyce bring forward his exit date by two months.
The unfolding events have led to a significant loss of trust within the community and left customers feeling disappointed.
In response to these challenges, Group Chairman Richard Goyder has issued a statement addressing the critical issues raised in the report.
The Report reveals that Qantas CEO Alan Joyce was paid $21.4 million over the last financial year. Notably, Chairman Goyder discloses that more than half of this payment could be subject to a clawback by the Board if significant misconduct is proven.
Trust Deficit: ACCC Allegations and Qantas Response
One of the primary factors contributing to the erosion of trust in the Qantas Group has been the allegations made by the Australian Competition and Consumer Commission (ACCC).
These allegations have become a focal point of concern, and Qantas has been fully cooperative with the ACCC’s investigations. The gravity of these allegations became apparent when legal action was officially announced on August 31 of this year.
The specifics of these allegations are still unfolding, and Qantas is currently constrained in its ability to provide detailed responses due to the ongoing legal process.
However, it is important to note that Qantas has a longstanding practice of offering customers an alternative flight or a refund when a flight is canceled.
Executive Remuneration and Performance Metrics
The FY23 financial report also sheds light on executive remuneration within the Qantas Group. The scorecard used to determine short-term incentive payments incorporates various financial and non-financial metrics, including safety, customer satisfaction, and emissions reduction.
Notably, despite doubling the number of passengers carried to an impressive 46 million, the Qantas Group maintained a strong record of operational safety.
Moreover, the company surpassed its net emissions reduction target by 3%, demonstrating its commitment to sustainability. Additionally, Qantas achieved higher punctuality rates compared to its major domestic competitor in 11 out of 12 months.
However, the report reveals that customer satisfaction levels, while showing improvement, still fall short of the desired benchmarks.
Consequently, this aspect of the scorecard was evaluated at zero out of a possible 20%, leading to a corresponding reduction in senior executive pay.
Alan Joyce: Possible Clawback of Payments
In light of the recent ACCC allegations, the Qantas Group acknowledges the concerns expressed by shareholders and the community regarding the alignment of these allegations with significant executive pay outcomes.
As part of a commitment to good governance, the Board has taken action by reducing short-term incentives for senior executives by 20% for FY23, acknowledging the impact of cumulative events on customer trust and the brand.
Furthermore, the Board has implemented clawback provisions on substantial portions of remuneration previously awarded but not yet released. These provisions would be invoked in the event of significant misconduct being proven.
In the case of Alan Joyce, the outgoing CEO, a substantial portion of his remuneration for FY23, including $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.
When combined with additional long-term incentives already granted, this would mean a total of $14.4 million is subject to clawback if considered necessary.
The Way Forward
With Alan Joyce having brought his retirement and exit date forward in the wake of recent controversies, incoming CEO Vanessa Hudson has now stepped into the leading role and will face the prospect of driving a turnaround for the national carrier.
Chairman Goyder finished his statement with a brief look at the road ahead, concluding:
“We’re determined to bring Qantas back to its position as one of the most trusted brands. That can only happen by consistently delivering to the standards people rightly expect, and the Board is working closely with Vanessa and her new management team to ensure that happens.”
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