Qantas shareholders’ warning over payment of bonuses withheld from execs and Alan Joyce

Qantas shareholders have delivered a stern warning to the board as it mulls over the payment of massive executive bonuses including to former CEO Alan Joyce.

The Qantas board has been urged to take a hard line stand on bonuses withheld from executives and former CEO Alan Joyce as a review considers whether payments should be made.

Organisations representing thousands of shareholders have reminded Qantas of the dissatisfaction on display at last year’s annual general meeting, in which the company’s remuneration report was sensationally voted down.

The Australian Council of Superannuation Investors, which represents pension funds that control more than 10 per cent of Qantas shares, said it believed the board should heed the message delivered loudly at the AGM.

“The 83 per cent vote against the remuneration report last year was a strong message from Qantas shareholders on bonuses,” ACSI chief executive Louise Davidson said. “The board has taken on that feedback, and we would expect it to be reflected in decisions regarding bonuses withheld.”

ACSI CEO Louise Davidson.

Major Qantas investor Hesta took a similar position, urging the airline’s board to “weigh the interests of customers, shareholders and broader stakeholders”.

“Getting this balance right is crucial for protecting and enhancing reputation and long-term company value,” said Hesta general manager of responsible investment Kim Farrant.

“We encourage the Qantas board to consider these matters when it’s structuring and awarding incentives.”

The Australian Shareholders Association welcomed the consideration being given by the board to payment of Mr Joyce’s bonuses, and hoped the company would “learn from the past”.

ASA policy and advocacy manager Fiona Balzer said they encouraged the review to consider whether there was an opportunity to claw back some of the payments made to Mr Joyce.

“We support investigation into the timing of payments and what was known at the time those decisions were made, in the context of the then current contracts and policies,” she said.

“The review should ensure the company learns from the past and updates its policies and practices to make sure the right behaviours and outcomes are achieved.”

Ms Balzer said Qantas should also consider what costs might be involved in making the decision whether to proceed with an attempted recovery of moneys from Mr Joyce.

It was expected any clawback would likely lead to legal action.

Proxy advisory firm ISS, which recommended voting against the Qantas remuneration report, said it was incumbent on the board to respond appropriately to the concerns raised by shareholders.

“The point of bonus deferral is to allow a board some scope to rethink in part the appropriateness of bonuses awarded in one year, in the context of subsequent developments and information coming to light,” said ISS head of Australia and New Zealand research Vas Kolesnikoff.

“It could be suggested that after the end of the 2023 financial year, there were a number of developments which in the opinion of many shareholders should have impacted the board’s decision on bonuses.”

The comments came as the board awaited advice from former Boston Consulting Group strategy chief Colin Carter, who has been asked by Qantas to advise if Mr Joyce is worthy of $16m in long and short-term bonuses. Almost all of the money in question, $14.4m, has already been paid to Mr Joyce.

Executives including new CEO Vanessa Hudson and Jetstar CEO Steph Tully are also waiting to hear if they have done enough to satisfy the board they should receive their short-term incentive plan bonuses, worth hundreds of thousands of dollars.

It was determined by the board last year that short-term bonuses should be docked by 20 per cent due to poor customer satisfaction, with the remainder withheld until more information was available.

Qantas CEO Alan Joyce has kept a low profile since his early exit from the airline last September amid a string of controversies. Picture: Peter Boer/Bloomberg via Getty Images

The issues in question, highlighted by the Qantas annual report, were the ACCC lawsuit over the sale of tickets on cancelled flights, and the illegal outsourcing of 1683 ground handling workers during the pandemic.

Since then Ms Hudson has reached a $120m settlement with the ACCC and is awaiting a Federal Court ruling on compensation for the outsourced workers, and a financial penalty for Qantas.

Ms Hudson has also overseen a lift in operational performance and customer satisfaction ratings, which she said were almost back to pre-pandemic levels.

Qantas shares were another matter, with the price yet to rebound to a high of $7.35 recorded in late 2019, shortly before the pandemic sent it plunging.

On Wednesday, Qantas shares remained under the $6 mark, at $5.93. A decision on the payment of bonuses and any clawback was expected in coming months.