Bonus in sight for for Qantas high flyer Alan Joyce

Qantas chief Alan Joyce could net more than a million extra shares worth close to $4m over the next three years.

Qantas chief executive Alan Joyce, centre, at the company’s annual general meeting yesterday. Picture: Joel Carrett

Qantas chief Alan Joyce could net more than a million extra shares worth close to $4 million over the next three years after the company’s shareholders overwhelmingly approved a new incentive scheme for the airline boss.

The new, long-term incentive scheme, which will run from 2017 to 2019, could earn Mr Joyce 1,172,000 new shares (worth $3.8m at current prices) adding to the whopping $13 million pay packet the Irishman took home this year.

Mr Joyce already holds about 3.47 million shares in Qantas, which are worth more than $11m at yesterday’s closing price of $3.25 a share.

At the company’s annual general meeting in Sydney yesterday shareholders voted in favour of the bonus scheme despite protests from veteran activist shareholder Jack Tilburn who said no CEO in the world was worth such largesse.

“No CEO is worth this quite large and extensive and over-generous $250,000 per week,” Mr Tilburn said.

“There are many, many other people within the Qantas Airways company, 20,000 other employees, who are helping the transformation — not just Mr Joyce.”

But Qantas chairman Leigh Clifford defended Mr Joyce’s salary and new bonus scheme, saying the airline’s chief executive would have to jump very high hurdles — including Qantas’s shareholder returns being in the top 25th percentile when compared to global airlines — to claim his reward.

“I agree that $12m is a significant sum but when the company was underperforming Alan got sometimes a short-term incentive award and a number of years he got no long-term incentive,” Mr Clifford said.

“Our structure needs to be mindful of the competitive environment we are in but I think it (also) needs to adequately reflect the performance (of management).”

Both Mr Clifford and Mr Joyce stressed the importance of the airline’s ambitious $2.1 billion transformation program that over the past two years has seen Qantas slash more than 4000 jobs, adopt a successful fuel hedging policy and eke out better returns from its aircraft.

Mr Clifford said that transformation program, which has delivered more than $1.6bn in savings, would help insulate the company from any serious headwinds in the near future.

“It is by far the biggest factor in Qantas’s turnaround over the past two years. And it positions Qantas well for the future,” Mr Clifford told the company’s shareholders.

Qantas posted a 57 per cent increase in full-year profit to $1.53bn this year, the best result in its 95-year history.

The bumper profit result was bolstered by a 38 per cent jump in operating cash flow to $2.8bn as the airline’s domestic, international and its budget brand Jetstar all posted record results.

Low oil prices (a key driver for the cost of jet fuel) also played a role in securing Qantas’s record profit result, with a $664m saving for the year to June 30.

But Mr Clifford moved to stamp out suggestions that Qantas’s bumper profit result was more the result of low oil prices than good management.

“This argument is a selective reading of the numbers. Many airlines are reporting losses or marginal profits despite the low cost of fuel,” Mr Clifford said.

“It’s obvious that transformation — not fuel — is the main difference between Qantas and other airlines in the industry.”

Mr Joyce said Qantas would continue to keep a tight rein on costs as headwinds continue to buffet international airlines in what Mr Clifford described as a volatile geopolitical environment and shaky global economy.

“Like most other global carriers, intense competition on international routes means we’re seeing airfares below where they were 12 months ago,” Mr Joyce said. “And the economic transition in Australia and broader geopolitical issues in the northern hemisphere continue to have an impact on aviation markets ­globally.”