The Qantas Board has concluded its review of executive remuneration for the 2023 financial year. The review has seen the Group trim almost $10 million from former CEO Alan Joyce’s remuneration package.
Other Group directors and executives also face cuts in the wake of the turbulent times which the national airline Group has weathered.
Incentives Cut in Turbulent Times
Last September, the Board announced a 20% cut in short-term incentives for Group Management Committee members. This decision came in response to challenges facing Qantas and acknowledged the impact on customers and brand reputation.
Further action was taken when the Board withheld the remaining FY23 short-term incentives for senior executives.
This move was prompted by the Australian Competition and Consumer Commission (ACCC) proceedings and a High Court ruling on Fair Work Act breaches related to ground handling outsourcing.
The 2023 Annual Report’s Remuneration section outlined these actions and noted the Board’s ability to adjust both short-term and long-term incentives.
Multiple factors contributed to damaging Qantas’ reputation and relationships with stakeholders. As part of an ACCC settlement, Qantas admitted to misleading customers about flight cancellations.
Pending Federal Court approval, the airline will pay a $100 million penalty and implement a $20 million customer compensation program. Penalties for Fair Work Act breaches are yet to be determined.
The Key Remuneration Cuts
The Board’s decisions were also informed by findings from the recently released Governance Review.
While no deliberate wrongdoing was found, the review highlighted mistakes by both the Board and management that led to significant reputational and service issues.
Key remuneration decisions include:
Former CEO Alan Joyce’s FY23 pay will be reduced by $9.26 million:
– 100% forfeiture of shares from the 2021-2023 Long Term Incentive Plan, worth $8.36 million
– 33% reduction in his FY23 short-term incentive, valued at about $900,000
Current and former senior executives will face a 33% cut in FY23 short-term incentives, totaling approximately $4.1 million (including Joyce’s reduction). The total reduction of 33 per cent for Mr Joyce and the other affected current and former senior executives will be implemented through a reduction in the deferred share component of the 2022-2023 STIP.
Current Non-Executive Directors who served during the relevant period will take a 33% cut in their base fees this year
The Board considered individual and collective accountability of Group Management Committee members when making these decisions.
It also acknowledged their efforts in guiding Qantas through the pandemic and subsequent recovery challenges.
As CEO, Alan Joyce held overall responsibility for the company’s performance. This has been reflected in the complete forfeiture of his 2021-2023 LTIP shares that vested in August 2023.
These measures aim to address recent issues while recognizing the complex challenges faced by Qantas leadership during a turbulent period.
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