Qantas share surge a windfall for CEO Alan Joyce

The soaring Qantas share price and the falling oil price have given chief executive Alan Joyce a massive windfall.

Qantas chief executive Alan Joyce enjoyed a pay rise on the back of better share performance. Picture: John Feder

The soaring Qantas share price and the falling oil price have given chief executive Alan Joyce a massive windfall on the shares component of his remuneration package, which soared to almost $13 million last year after he oversaw a big turnaround in the group’s financial performance.

For the year to June 30, Mr Joyce received $13m in pay, incentives and entitlements, including his largest ever short-term cash bonus of $3.3m. His total pay packet was up 9 per cent on the prior year’s $11.9m.

For the entire executive group the Qantas annual report revealed remuneration totalling $29.2m and total cash bonuses of $7.7m. The short-term cash rewards were up $3m on the comparable number last year.

Qantas chairman Leigh Clifford defended the healthy bonus payments, noting shareholders had been rewarded through $1.5bn in buybacks and dividends, while non-executive employees received bonuses at the end of each of the last two financial years.

This year the airline paid 25,000 staff cash bonuses between $2500 and $3000, in addition to a 5 per cent bonus paid last year for staff who agreed to an 18-month pay freeze.

“When Qantas was not performing well financially, no bonuses were given, all executive salaries were frozen and the CEO took a pay cut,” Mr Clifford said.

“As the company has moved through its transformation the financial performance has turned around, we are able to reward our people.”

Mr Clifford labelled the turnaround in fortunes of the group a “major achievement”, culminating in a record $1.52 billion profit for the 2016 financial year.

The company also resumed dividend payments for the first time in seven years, rewarding patient shareholders with a 7c payout.

Since the end of the 2014 financial year Qantas has also seen its share price recover from $1.35 to $3.26, which drove a big increase in total shareholder return.

The Qantas annual report reveals its remuneration committee last year considered a number of alternative long term incentive plan performance measures, such as return on invested capital.

But it decided the current measure of the airline’s TSR compared to companies in the ASX100 and Global Listed Airlines remained the most appropriate measure.

Mr Joyce’s base pay was $2.1m, slightly above last year as a 5 per cent pay cut he made in January 2014 was reinstated.

His cash bonus of $3.3m took his total actual cash payments in the hand last year to $5.4m. In addition he was awarded a deferred bonus of $1.6m worth of shares with a two-year restriction period.

The bonuses were based on a number of internal measures, including the delivery of higher than budgeted cost savings and revenue enhancements in 2015-16.

Net promoter score targets for customer service for Qantas International, Qantas Domestic and Qantas Frequent Flyer were also exceeded. They were not achieved by Jetstar Domestic.

Under the 2014-2016 LTIP, a fixed number of rights were awarded to the executive team in 2013. Based on Qantas’s TSR of +109 per cent over the three-year performance period, the rights all converted to shares.

As a result Mr Joyce was awarded 2.1 million shares. After the Qantas share price rise, their $2.9m value in mid 2013 has now increased by $3.1m, taking his total cash and shares package to almost $13m.

Qantas also revealed yesterday that Mr Joyce sold the 2.1 million shares that vested, which is understood to be for tax reasons due to the liability attached to them.