Qantas directors in shareholders’ sights at AGM over big payout to Alan Joyce

The airline’s directors could make history if shareholders decide to remove them via a ‘spill motion’ off the back of outrage over Alan Joyce’s huge payout and other issues.

Qantas chairman Richard Goyder looms large over the airline’s 2021 AGM in Perth. Picture: Supplied

Qantas directors could find themselves facing a humiliating “spill motion” if the airline’s remuneration report is rejected by shareholders at Friday’s AGM — and again next year.

All proxy advisory services and several large shareholders have indicated their opposition to the remuneration report, which saw former CEO Alan Joyce leave with a $21.4m payout.

But if 25 per cent or more shareholders vote “no” to the remuneration report — essentially nothing happens until the next AGM.

In the event the report is again voted down, a spill resolution would come into play with all the directors who approved the remuneration required to stand for re-election at a separate meeting.

Five items are listed on the agenda, most notably the re-election of directors Todd Sampson and Belinda Hutchinson, the adoption of the remuneration report and the participation of new CEO Vanessa Hudson in a long-term incentive plan (LTIP).

University of Queensland Law School senior lecturer Vicky Comino said never in Australian corporate history had an incumbent director lost their board seat as the result of a spill.

“It will be interesting to see what will happen at the Qantas AGM but I’m not holding my breath,” said Dr Comino.

“Shareholders have an opportunity at the AGM to ask questions and submit questions beforehand, but all the evidence points to shareholder control really being quite illusory.”

Australian Shareholders Association policy manager Fiona Balzer agreed it would be most unusual for a spill of directors to occur.

“Shareholders can get that unhappy but usually directors read the room and lay out plans to improve,” Ms Balzer said.

“Also it’s more efficient to add a resolution to the AGM to remove directors — so they don’t have to wait for the spill resolution which would take time and distract from fixing everything.”

Former CEO Alan Joyce avoided AGM scrutiny after bringing forward his retirement by two months. Picture: Supplied

In one of the most anticipated AGMs in years, Qantas chairman Richard Goyder is expected to address key concerns after a string of controversies.

The illegal outsourcing of nearly 1700 workers, the alleged sale of tickets on already cancelled flights, executive bonuses and the mishandling of Covid travel credits have all raised questions about Qantas’ corporate governance.

A further headwind is looming in the form of a judgment by the New South Wales District Court due to be delivered in Sydney on Friday, shortly before the AGM in Melbourne.

The ruling will determine whether Qantas breached safety rules by standing down a cleaner after he flagged concerns about inadequate protective gear as the Covid pandemic erupted.

Although the board has taken some steps to appease shareholders including an earlier departure for Mr Goyder and the exit of two directors next year, it remained to be seen if that would help defuse the mood of the AGM.

Large shareholders HESTA and Norges Bank have expressed their opposition to the remuneration report, along with proxy advisory services Glass Lewis, ISS, Ownership Matters, the Australian Council of Superannuation Investors and ASA.

Some are also opposed to the re-election of Mr Sampson, and Ms Hudson’s involvement in the LTIP until she “proves herself” as CEO.

Dr Comino said behind the scenes large institutional investors would also be having their say.

“Their focus is on corporate governance, business performance, risk management, those sorts of things and where you’ve had problems like Qantas has had, you would think they would be looking to engage with Qantas about these things, and if they’re not happy I’m sure they will be vocal about it,” Dr Comino said.

“We have already seen that with Richard Goyder saying he had the support of significant shareholders, only to discover that he did not.”

ASA chief executive Rachel Waterhouse said AGMs often looked like “rubber stamping” of decisions but the Qantas meeting should prove to be “interesting”.

“The Qantas AGM shows how a fixed day for public engagement with shareholders crystallises the board into finally stepping up and outlining how it will renew and how it will repair the company’s reputation,” Ms Waterhouse said.

“There’s been quite a lot of engagement on this one, and it’s good to see the level of interest from shareholders.”

Unions were also watching the AGM carefully, particularly any plans set out for the future.

Australian Services Union assistant national secretary Emeline Gaske said investment in staff must be central to any future strategy.

“I expect that it won’t be an easy meeting for the board of Qantas on Friday, however directors must listen to not only shareholders but also loyal employees and customers who want to see it do much better in the future,” said Ms Gaske.

“A good start would be to invest in high-quality customer service by bringing call centres back onshore and in-house.”

Originally published as Qantas directors in shareholders’ sights at AGM over big payout to Alan Joyce