Qantas‘ Board has finalised its decisions regarding executive remuneration for FY23, implementing significant reductions in response to recent challenges and reputational damage. Last September, the Board announced a 20% reduction in short-term incentives for members of the Group Management Committee, recognising the brand and customer impacts from various cumulative events, including operational disruptions and legal issues.
In light of the Australian Competition and Consumer Commission (ACCC) proceedings and a High Court ruling on breaches of the Fair Work Act, the Board took further action by withholding the delivery of the remaining short-term incentives for senior executives. This move was detailed in the Remuneration Report within Qantas’ 2023 Annual Report, highlighting the Board’s ability to enforce remuneration consequences for both short-term and long-term incentive plans.
As part of a settlement with the ACCC, Qantas admitted to misleading customers about its flight cancellation processes, agreeing to pay a AU$100 million penalty, pending Federal Court approval, along with a AU$20 million customer remediation programme. Penalties related to the Fair Work Act breaches are yet to be determined.
In addition to these legal and financial penalties, the Board has conducted a Governance Review, which, although it found no deliberate wrongdoing, acknowledged that mistakes by both the Board and management significantly contributed to Qantas’ reputational and customer service issues.
Former CEO Alan Joyce, who held overall accountability for the company’s outcomes, will face a reduction of AU$9.26 million in his FY23 remuneration. This includes the forfeiture of AU$8.36 million in shares from the 2021-2023 Long Term Incentive Plan (LTIP) and a 33% reduction in his short-term incentive, amounting to approximately AU$900,000. The Board has also decided that short-term incentives for other current and former senior executives will be reduced by 33%, resulting in an overall reduction of AU$4.1 million.
Furthermore, Non-Executive Directors who were on the Board during this period will see a 33% reduction in their base fees this year, reflecting the collective accountability for the issues that have affected the airline’s reputation and stakeholder relationships.
These decisions underscore the Board’s recognition of the serious impact these events have had on Qantas’ standing with its customers, employees, and the broader community. The reductions in executive remuneration are seen as necessary steps to align accountability with the challenges Qantas has faced and to begin the process of rebuilding trust and restoring the airline’s reputation. (US$1.00 = AU$1.52 at time of publication).
