By Amelia McGuire, Elizabeth Knight and Angus Thompson
Qantas chairman Richard Goyder has moved to defend the airline’s chief executive Alan Joyce after the carrier revealed he received a pay increase and bonus shares worth millions last financial year despite widespread customer service problems that have infuriated passengers.
The national carrier’s annual report released on Friday shows that on a statutory basis, Joyce was paid $5.5 million last year, including $2.2 million in cash pay and $3.3 million in bonus shares that could vest in the future if certain goals are met. On an ‘actual’ basis, Joyce’s took home $2.17 million, up 15 per cent from last year.
While investors continue to support Joyce, the issues afflicting Qantas have led a chorus of critics to call for his resignation. But Goyder on Friday issued a strident defence of the man who has led Qantas since 2008. In an interview with The Sydney Morning Herald and The Age he described Joyce as “the best CEO in Australia by a length of a straight” and said the job was not a popularity contest. “Believe it or not, Alan has a heart”, he said.
Qantas chief Alan Joyce pocketed $2.17 million and more than 600,000 performance share rights this year.Credit: James Brickwood
Pressure on Qantas has intensified this week after the ABC’s Four Corners alleged a spate of issues at the carrier, and after a string of incidents with delayed flights. About 4000 Jetstar passengers were stranded in Indonesia following eight cancelled returning services and a QantasLink aircraft from Sydney to Lord Howe Island was overloaded by 160 kilograms.
Qantas says it restored Joyce’s base salary to 2019 levels because he took zero pay for three months in 2020 and for one month in 2021, in addition to three months on reduced pay in 2021.
In addition to the $2.17 million in base pay, Joyce was granted 698,000 share rights under the carrier’s Reward and Retention program. The rights hinge on Qantas turning to a profit by August 2023. Qantas shares are currently trading at $5.24, meaning the bonus shares could be worth over $3.6 million if the shares were to remain at that level.
For a third straight year, Joyce deferred a decision on whether to take all the bonus shares he is entitled to under the company’s long term incentive plan until at least August 2023.
Across the deferred bonus schemes-which stretch back to 2018- the 56-year-old is entitled to about one million bonus shares, worth $5.25 million at the current trading price, and more if the share price moves higher.
This year Qantas has struggled to cope with a surge in demand for air travel, with staff shortages, flight delays and lost baggage resulting in widespread customer complaints. Joyce, whose contract runs until 2023, has ruled out leaving until the carrier has fully recovered from the COVID-19 crisis.
Federal Labor senator Tony Sheldon described Joyce’s pay packet as “offensive as all hell.”
“He obviously feels he’s earned it after doing all the bad work on the tarmac,” Sheldon, a former secretary of the Transport Workers’ Union, said.
Critics of Joyce have blamed the airline’s aggressive cost-cutting program at the start of the pandemic – which included the axing of 9400 jobs – for its slipping performance. Qantas outsourced baggage ground handling in 2020, resulting in 1700 redundancies. The Federal Court found the move was in breach of the Fair Work Act, a verdict the airline is appealing in the High Court.
“It’s shameless that while thousands of people are stranded in Bali and everywhere else, he gives himself a massive payday,” said Sheldon. “Flights are still being cancelled right around Australia. All the jobs lost, all the lives ruined, and this is what it’s all been about, Joyce’s pay packet.”
Sheldon suggested the Qantas board “show some contrition” in light of the turmoil confronting the airline, including its industrial woes.“It just demonstrates that Alan Joyce has got the board around his little finger with a multimillion-dollar ring,” he said.
Formerly the highest-paid executive in the country, Joyce’s actual pay was 77 per cent lower than before COVID-19, when he pocketed $9.9 million in FY19 and $10.8 million in FY20 due to the lack of a bonus. He took home $24 million in 2017, driven by the skyrocketing value of Qantas shares included in his remuneration.
Transport Workers Union national secretary Michael Kaine accused Qantas of rewarding Joyce for “crucifying the spirit of Australia.”
Across the group, executive pay was 64 per cent lower in 2022 than before COVID, due to no short-term bonuses and a freeze on contracted base pay.
Total pay across the company’s top five executives was $8 million, up from $7.3 million in 2021 and $5.8 million in 2020 but down from $22 million in 2019.
Qantas reported its full-year loss more than halved to $860 million in FY22. The result means Qantas’ cumulative losses during the COVID-19 pandemic have surpassed $7 billion.
In the annual report Goyder said the loss “hopefully represents the last chapter of the terrible impact the COVID-19 crisis had on Qantas.”
“Executive pay has been constrained throughout the pandemic, with a wage freeze and no annual bonuses for the third year in a row. The retention bonus in place for next year is key to keeping the considerable talent we have, and it depends on delivering the recovery in full,” Goyder continued.