Qantas Airways Ltd (ASX:QAN) has conceded that actions taken by its board over the past 12 months had dealt a blow to the company’s reputation and its ability to meet customer needs, deciding that former CEO Alan Joyce should have his renumeration package reduced by $9.26 million.
The decision on Joyce’s pay was guided largely by Qantas’ Governance Review – kicked off in October 2023 and announced today – which aimed to scrutinise the board’s decision-making and governance processes, much of which had been fodder for the news and business media in Australia and overseas in the previous year.
The Review claimed that no deliberate wrongdoing was evident, however it was acknowledged that ‘mistakes were made by the Board and management which contributed to the Group’s significant reputational and customer service issues’.
In addition to Mr Joyce’s renumeration downgrade – which was for the 2023 Financial Year – short term incentives for ‘affected current and former senior executives’ would fall by 33%, the board decided.
This meant the total hit to Qantas executives in terms of short-term incentives for FY 2023 would reach around $4.1 million.
While the board noted the ‘individual and collective accountability of members of the Group Management Committee’, it placed most of the blame on Joyce as CEO at the time, with this explaining the forfeiture of the shares held on his behalf as part of the 2021-2023 Long Term Incentive Plan (LTIP), vested in August 2023.
The Review – led by business adviser Tom Saar – delivered 32 recommendations on how Qantas governance could be improved, and the board noted that several of these were already underway.
These included tightened protocols for the approval of share trading by top executives, amendments to its renumeration framework, and the enhancement of board consultation and approval required in relation to issues of importance to stakeholders and the wider community.
Qantas is also set to gain a new chairman, following the retirement of Richard Goyder – first announced in October last year – replaced by John Mullen, who said the Review had provided stronger direction for the company under new CEO Vanessa Hudson.
“It’s important that the Board understands what went wrong and learns from the mistakes of the past as it’s clear that we let Australians down,” Mr Mullen said.
“As the national carrier it is our duty to make sure we always act in the best interest of stakeholders and hold ourselves to the highest level of accountability.
“Vanessa and her new management team have made positive progress towards delivering better outcomes for customers and employees, but there is still a significant amount of work to be done to rebuild the trust of all stakeholders.”
Qantas shares saw a fall on Thursday, and at 12:19 AEST, were trading at $5.87, a drop of 1.68% since the market opened.