Alan Joyce pay soars as happy days return to Qantas
Qantas has defended Alan Joyce’s windfall gains from the airline’s turnaround, almost doubling the CEO’s pay.
Qantas has rushed to defend Alan Joyce’s windfall gains from the airline’s dramatic turnaround, with the chief executive almost doubling his pay last year to $24.6 million while average wage growth across the economy remains weak.
Mr Joyce, who revealed this week he personally had donated $1m to the same-sex marriage Yes campaign, also disclosed yesterday he had reaped $20m from selling 3.5 million Qantas shares on Monday and Tuesday.
He retains 3.6 million shares, which still ranks him among the company’s top 20 shareholders.
Sensitive to the fact Mr Joyce could end the financial year as the nation’s top-paid executive, Qantas chairman Leigh Clifford defended the airline’s pay practices.
He said 97 per cent of shareholders had supported a 2014 proposal to link senior management bonuses to Mr Joyce’s $2 billion turnaround plan.
“For a business that was facing an uncertain future three years ago, and was in no position to pay bonuses to any of its people, the fundamentals that underpin (yesterday’s) pay disclosures show how far we have come,” he said.
While the pay outcome was “high”, it reflected the company’s exceptional performance, including its top ranking for total shareholder return (share-price growth plus reinvested dividends) among global airlines and the top-100 listed companies in Australia.
In 2014, Qantas was a distressed airline, reporting a record $2.8bn loss after a profit-sapping war against local rival Virgin and persistent losses in its international division.
Mr Joyce, whose base pay has been frozen since 2011 and was $2.1m last year, gave up 5 per cent of his base pay for the 18 months to June 2015.
The sharp fall in fuel prices has been a big tailwind for Qantas, boosting its underlying profit by $400m in 2016 and a further $196m last year. However, the airline has shed thousands of jobs, restructured its international division and reinvested heavily.
Last month, it unveiled its second-biggest profit, an underlying pre-tax profit of $1.4bn. All transformation targets were achieved.
Mr Clifford said Qantas was now one of the best-performing airlines in the world.
The share price had risen by 350 per cent since the dark days of 2014 as market value surged from $2.5bn to $10bn. In the same period, about $3.5bn in profit had been generated, he said.
“And the value of executive bonuses, which are mostly paid in Qantas shares, have risen with it.”
This meant shares worth $1.26 when they were awarded in 2014 were being paid out in bonuses today when they’re worth $5.72. In Mr Joyce’s case, share-price growth accounted for $14.5m of his $24.6m pay package.
Mr Clifford said the success of the turnaround had resulted in $220m being paid in bonuses to 25,000 Qantas staff in the past three years. However, the bonuses were likely to be much lower in future.
One of Qantas’s big shareholders, BT Investment Management, strongly supported Mr Joyce’s remuneration as pay for performance.
“Alan Joyce has navigated the company through a period of corporate distress, has successfully competed through a domestic capacity war and transformed the company’s cost base,” BT investment analyst Sondal Bensan said.
“All of this has resulted in a sustainable and significant windfall for shareholders, and hence he is being paid for performance.”
Ownership Matters principal Dean Paatsch, who advises big institutions how to vote their shares at company meetings, agreed.
“Alan Joyce’s pay is a big number by any stretch,” he said.
“But the Qantas share price has quadrupled and his experience mirrors that of very happy long-term shareholders.”