Qantas board to face questions about succession planning as Alan Joyce heads into his 15th year as CEO

The Qantas annual general meeting will face questions about the airline’s chief executive succession plan as Alan Joyce begins his 15th year in the job.

The Qantas board will face questions about the airline’s chief executive succession plan at its AGM on Friday as shareholders are asked to approve a potential $13.8m payday for Alan Joyce.

Australian Shareholders Association CEO Rachel Waterhouse said they were interested in what Qantas’s succession plan looked like, after 14 years with Mr Joyce at the helm.

Qantas chairman Richard Goyder has previously said Mr Joyce is expected to leave by the end of 2023 after overseeing the airline’s recovery from the brutal pandemic.

“The succession plan is important from a confidence perspective for shareholders,” said Ms Waterhouse.

“The organisation has been very reliant on one individual for a period of time. He’s done really well at several points in time, but retail investors will want to know who is in the wings and who can deliver the targets going forwards.”

Qantas’ board will face questions about its chief executive succession plan at its AGM on Friday as shareholders are asked to approve a potential $13.8m payday for Alan Joyce. Picture: Mick Tsikas/AAP Image

Qantas has a history of promoting from within, and the airline was not expected to advertise externally for a new CEO.

Chief financial officer Vanessa Hudson is the only executive who has publicly stated her interest in replacing Mr Joyce.

Other possible contenders include Qantas Loyalty boss Olivia Wirth, and Qantas chief customer officer Steph Tully who was recently announced as the next Jetstar CEO, replacing Gareth Evans.

Mr Evans had been considered a contender for the top job, but the widely held belief was that the next CEO would be a woman, Qantas’s first female CEO.

Mr Joyce headed Jetstar before his promotion to Qantas CEO in November 2008.

Shareholders will be asked to vote on Mr Joyce’s participation in a retention recovery plan and the long term incentive scheme that will help deliver a $13.8m send off for the CEO.

Ms Waterhouse said the ASA had recommended members vote in favour of the sizeable bonuses as well as the remuneration report, which delivered most senior executives healthy pay rises.

“The key things for us is that Qantas is rebuilding its business into a sustainable business given the impact of the Covid pandemic, and the recovery program and the remuneration is intended to reward executives to make sure they attain the company’s targets and maintain them,” she said.

“They have foregone a lot of remuneration in the last couple of years, and it’s a competitive corporate environment for keeping key executives.”

Qantas chairman Richard Goyder and CEO Alan Joyce at the airline’s 2019 AGM in Adelaide. Picture: David Mariuz/AAP

Major proxy firm ISS saw things differently to the ASA and was recommending shareholders vote against the remuneration report and Mr Joyce’s participation in the recovery retention plan (RRP).

In a report to clients, ISS said the “CEO’s remuneration was set well above the market median (at $2.17m) and had been identified as a high concern for misalignment of pay with underlying company performance over the past three years”.

The report also raised concerns the RRP performance measures had not been set at “sufficiently challenging levels in light of the company’s recent market update” that forecast a half year profit of up to $1.3bn.

Remuneration for directors was another “problem” because it included post-employment air travel based on years of tenure on the board, which represented “inconsistency with accepted good corporate governance practice in this market”.

“Most ASX300 companies have eliminated post-employment director entitlements,” the ISS report noted.

A Qantas spokesman said ISS was the only proxy advisor to recommend votes against any of the AGM resolutions, with CGI Glass Lewis, Ownership Matters and the ASA supportive.

He said ISS had been “selective in its assessment of Mr Joyce’s remuneration based on benchmarking of non-comparable firms”.

“Alan has not had a pay rise since 2018 and is the only CEO in the ASX100 not to receive an annual bonus in the last three years,” said the spokesman.

“Our recovery and retention plan is a two-year plan covering the 2022 and 2023 financial years, tied to achieving key performance targets of our Covid recovery plan.”

Qantas shares were up 0.8 per cent at $5.89 on the ASX, valuing the airline around $11.01bn, early Tuesday morning.