Qantas cuts former CEO Alan Joyce’s pay by $9.3 million following damning review

Former Qantas chief executive Alan Joyce has had more than $9 million docked from his pay following a board-commissioned review of the airline’s management, meaning he will be paid $15 million for his last year leading the company.

The review was led by ex-McKinsey partner Tom Saar and found Joyce’s 15-year tenure as chief executive directly contributed to the erosion of the airline’s relationship with its regulators and customers. It also found the board did not adequately challenge its executives and failed to acknowledge non-financial risks.

Former Qantas chief Alan Joyce’s final pay packet has been cut dramatically.Credit: Dion Georgopoulos

Joyce, who left his role at the head of Qantas in September, will lose $9.26 million, with the review finding the group’s management contributed to a string of failures that resulted in “considerable harm to its relationships with customers, employees and other stakeholders”.

Qantas has been under pressure from politicians, investors, employees and customers to claw back Joyce’s long and short-term bonuses, about $11 million, after it was forced to settle a court case with the ACCC; rectify low consumer satisfaction; and deal with a recent High Court verdict which found the group illegally sacked 1700 ground handlers.

Joyce’s total pay for his final year could have been up to $23.6 million when accounting for his $2.2 million base salary and the total sum of short and long term incentive entitlements. Instead, he will receive $14.9 million which includes his salary, retention bonus and $6.5 million in deferred long-term bonuses issued during the COVID-19 pandemic.

Credit: Matt Golding

He will retain pro rata entitlements for future long-term bonuses which will convert to shares if the company meets its performance goals. Under the group’s 2022-2024 plan, Joyce has 626,110 shares. For 2023-2025, he has rights to an additional 353,956 shares.

The board has also reduced the short-term bonuses of all other current and former executives who were part of the leadership team last year by 33 per cent. This group includes current CEO Vanessa Hudson, who served as the group’s finance chief before replacing Joyce.

Saar found Qantas centralised decisions and overly relied on Joyce – who held executive roles at the group since 2003 – to make decisions.

“This contributed to a top-down culture, which impacted empowerment and a willingness to challenge or ‘speak up’ on issues or decisions of concern.”

“While there were no findings of deliberate wrongdoing, the review found that mistakes were made by the board and management which contributed to the group’s significant reputational and customer service issues,” the company said in a statement.

Qantas CEO Vanessa Hudson replaced Joyce last year.Credit: Oscar Colman

Saar has made 23 recommendations to address the company’s issues which the Qantas board has committed to implementing. These include making staff “a bigger priority” and “invest[ing] more time to understand customers and recover lost trust”.

Incoming Qantas chair John Mullen said the board needed to understand the cause of Qantas’ problems following the COVID-19 pandemic as it was clear “we let Australians down”.

“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,” he said.

Senator Tony Sheldon, a former Transport Workers Union leader who has long been critical of Qantas, said the decision to claw back the bulk of his entitlements was correct.

“It ensures he experiences at least a small fraction of the suffering Qantas inflicted upon its workers and customers throughout his tenure,” Sheldon said.

” The recognition that the actions of other Qantas executives were so egregious that their bonuses should also be clawed back emphasises that those remaining are not fit to continue,” he continued.

The head of the Australian and International Pilots Association Tony Lucas said the body welcomed the clawback following one of the most damaging periods in the airline’s history.

“Management and the board must now deliver the cultural change that has been promised, especially by working constructively and collaboratively with the dedicated frontline staff.”

Major proxy advisor, Institutional Shareholder Services, said the Qantas board did not go far enough given Joyce will still receive close to $2 million in bonuses.

“It seems to me that they’re splitting hairs so they can work out how to still give him some money. He should have been docked the whole thing,” ISS’ head of research Vas Kolesnikoff said.

Executive manager of the Australian Council of Superannuation Investors, Ed John, said it was critical the company learns from the identified missteps.

“Last year, Qantas received one of the highest ever “no” votes on CEO pay from Australian investors. The cancellation of over 9 million dollars in incentives is an important step in responding to investor concerns.”

Joyce sold $17 million in Qantas shares in June 2023 to the chagrin of investors. The review found the company’s policies on share selling were not market-leading and called for additional scrutiny of share dealings proposed by executives.

Qantas confirmed the chair and audit committee chair will now be required to approve any share sale.

“Many of the actions taken by Qantas in response to the recommendations are complete or well under way,” Saar said.

Qantas shares are 1.6 per cent lower at $5.88 on Thursday afternoon.

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