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Virgin boss John Borghetti takes $2.5m pay cut

Virgin boss John Borghetti pocketed just over $4m in 2018, down from $6.5m, after failing to hit performance marks.

John Borghetti says he will leave Virgin by January 2020. Pic: James Croucher
John Borghetti says he will leave Virgin by January 2020. Pic: James Croucher

Virgin Australia boss John Borghetti has taken a $2.5 million annual pay cut after a failure to achieve key performance measures.

The chief executive, who has announced his intention to leave the airline by January 2020, pocketed $4.015 million for the 2018 financial year, compared with $6.5m last year.

It follows Virgin Australia’s (VAH) annual loss of $653m, its sixth in succession and $470m down on the previous year.

But the underlying before tax profit was $109m, up from a $3.7m loss in 2017.

The main difference in Mr Borghetti’s salary this year was a reduction in the cash bonus from $1.8m to $1.26m, and the loss of any long-term incentive payments, which last year delivered him an extra $2.19m.

His short-term incentive bonus was also limited to 53 per cent of its potential sum, as a result of “fail marks” in the key performance areas of guest satisfaction and free cash flow.

Virgin executives scored a “partial” win in relation to underlying before-tax profit weighted at 35 per cent of the bonus. They exceeded the “better business” goals and “met” safety and culture measures, each weighted at 5 per cent.

The $653m full year loss included significant writedowns in the international business and deferred tax assets, seen as Mr Borghetti’s way of clearing the decks for his eventual successor.

His base salary was $1.95m, not far below that of Qantas Group CEO Alan Joyce, who earns a base salary of $2.1m.

But Mr Joyce’s total salary for 2018 was $10.9m, more than twice that of his business rival.

New Tigerair CEO Merren McArthur pocketed $1.13m and Virgin Australia Airlines group executive Rob Sharp $1.4m.

In her foreword in the Virgin Australia annual report, chairman Elizabeth Bryan thanked Mr Borghetti for his work, in recognition of his impending departure.

“John has served as CEO now for more than eight years and in that time, he has led one of Australia’s most significant business transformations,” Ms Bryan wrote.

“John will remain focused on leading the Virgin Australia Group while the board conducts a search for his successor.

“I would like to thank John for all of his work, and for providing the board with ample time to conduct a thorough recruitment process.”

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Original URL: https://www.theaustralian.com.au/business/aviation/virgin-boss-john-borghetti-takes-25m-pay-cut/news-story/6d4e75d3d0a9e9bf2276f1990096a40c