Qantas Board Imposes A$9.26 Million Pay Cut on Former CEO Alan Joyce
The board of Qantas, Australia’s flagship carrier, has imposed a significant reduction in the final remuneration of its former CEO, Alan Joyce. This decision resulted in a AUD9.26 million (approximately USD6.11 million) cut from Joyce’s pay package. This measure was part of a broader response to a series of public relations setbacks and customer service issues attributed to Joyce’s management style during his tenure, particularly through the COVID-19 pandemic.
Alan Joyce, who stepped down from his role in early September 2023 amid a wave of criticism over several mishandled PR events, faced a dual reduction in his compensation. This included forfeiting AUD8.36 million (USD5.51 million) in shares from a Long-Term Incentive Plan (LTIP) and a 33% slash in his short-term incentives, which amounted to AUD900,000 (USD594,000).
The pay cut extended beyond Joyce to other senior executives both current and former, who also saw a 33% reduction in their short-term incentives, tallying a total decrease in management pay by about AUD4.1 million (USD2.7 million) for the fiscal year 2023.
Announced on August 8, this decision aligns with the outcomes of a governance review initiated in October 2023 after the airline encountered legal and regulatory challenges during Joyce’s final year as CEO. Notably, this includes proceedings by the Australian Competition and Consumer Commission (ACCC) and a ruling from the Australian High Court concerning violations of the Fair Work Act related to Qantas’s outsourcing of ground handling jobs.
The review, led by business advisor Tom Saar, pointed to systemic issues under Joyce’s leadership that contributed to Qantas’s tarnished reputation and strained relationships with customers, employees, and other stakeholders. It identified a series of operational mishaps, including delayed flights, misplaced baggage, and excessive wait times at call centers. Furthermore, issues such as mishandling of customer COVID credits and post-pandemic pricing strategies were highlighted alongside Qantas’s legal entanglements over canceled flights and unlawful outsourcing practices.
In terms of cultural and leadership flaws, the review criticized a disconnect between Qantas’s renowned safety culture and its broader leadership ethos, which prioritized financial outcomes over addressing stakeholder and non-financial risks. It noted the dominating presence of a top-down leadership approach under Joyce, which suppressed open feedback and diminished staff morale.
Moreover, the review criticized the board’s engagement with management, describing it as lacking vigorous debate and timely intervention on critical issues. This led to delayed responses to significant problems that might have been addressed more effectively with earlier board involvement.
In response to the governance review’s findings, Qantas has made several policy changes to enhance corporate governance and ethical standards. These adjustments include updated codes of conduct, the formation of a market disclosure committee, refined conflict of interest provisions, and stricter controls over share trading by executives. The aim is to realign the company with best practices and restore its reputation among stakeholders and the broader public.
The board’s decisive actions reflect a commitment to rectifying past mistakes and steering the airline towards improved governance and customer relations, emphasizing a shift away from the criticized “command-and-control” leadership style that marked Joyce’s era.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com