In September 2023, we saw former Qantas CEO Alan Joyce resign ahead of his planned retirement. Joyce had served as Qantas CEO since 2008, and while the airline reported record profits at the time, the company’s reputation was at an all-time low, and the airline even faced significant fines from the government over its business practices.
What caused additional outrage at the time was what a big bonus Joyce was getting for this performance as he was on his way out, so there’s now a major update…
In this post:
Alan Joyce has pay slashed by over $9 million AUD
In October 2023, the Qantas Board launched a governance review, analyzing matters at the company over the previous 12 months. This review included scrutinizing the decision making and governance processes of the board that led to the loss of trust among stakeholders. This review included both internal and external input, and it has now been published.
The most interesting development is that former Qantas CEO Alan Joyce’s pay package has been reduced by $9.26 million AUD (~$6.07 million USD). In 2023, it was revealed that Joyce would have total earnings of $21.4 million AUD in 2022-2023. However, the company was withholding $10.5 million AUD, as it considered using a clawback provision in his contract to address concerns over his performance.
As part of this development, the company is docking him 100% of shares held on the long-term incentive plan for 2021-2023, valued at $8.36 million AUD. The board also decided on a 33% reduction to his short-term incentive plan, valued at $900K.
The report concluded that “the events that damaged Qantas and its reputation and caused considerable harm to relationships with customers, employees and other stakeholders were due to a number of factors.”
The review found that a “top-down” culture at Qantas meant that other leaders felt they couldn’t challenge Joyce’s controversial decisions. Specifically, “there was too much deference to a long-tenured CEO who had endured and overcome multiple past operational and financial crises.” The report also found that management had “an adversarial approach to engagement with key stakeholders and external communications.”
In Joyce’s final year, the airline incurred up to $100 million AUD in penalties and $20 million AUD in compensation costs related to selling tickets on flights that the airline had already canceled. Then there was another $100 million AUD in compensation for ground handlers that Qantas illegally dismissed during the coronavirus shutdowns.
Lastly, the review found that the Qantas Board “was financially, commercially and strategically oriented,” and recommended the focus “should be complemented by enhanced focus on non-financial issues, employees, customers and all stakeholders.”
I’m happy to see Joyce held accountable (somewhat)
I’ve never been a fan of Joyce, plain and simple (and that’s sad to me, because he’s the longest serving openly gay CEO of any major airline, so I really want to like him). While he has no doubt made decent commercial decisions, he has consistently shown complete disregard for customers and employees, in a way that I just can’t get behind.
Nonetheless, he stayed in power as CEO for 15 years. While he’s retiring a rich man, it’s at least good that he’s getting “docked” a bit for his actions.
But here’s the bigger issue — he was in his position as CEO for 15 years, and the Qantas Board just let him continue to act the way he did, completely unchecked? Were they asleep, or how was it suddenly a surprise that the company had a “top-down” and “adversarial” culture? I could’ve told you that, and I’ve never even been to the company’s headquarters.
Unfortunately this is true at all too many airlines (and companies in general, for that matter). It’s so common for boards to just sit there twiddling their thumbs as the company’s upper management makes mistake after mistake, either when it comes to a company’s bottom line, or when it comes to a company’s reputation. I mean, just look at what the Tempe Boys are doing in Fort Worth.
Then suddenly these boards just spring into action after there’s so much public outcry that things can’t continue the way that they have…
Bottom line
Former Qantas CEO Alan Joyce has just had his pay slashed by $9.26 million AUD, following a governance review. While Joyce spent 15 years at the helm of Qantas, his complete disregard for anything but the bottom line finally caught up to him the last year, as the company’s reputation plummeted.
I’m happy to see Joyce being held accountable in some form, though I can’t believe how long it took to get to this point…
What do you make of Joyce getting some of his incentives slashed?
Interesting to me is that it took Qantas over 10 yrars to realise Joyce was only in it for himself
Took my first QF flight in 1980 and was a loyal customer for decades until about 2014, during Joyce's tenure. Along the way, I got to personally know three department heads from the James Strong and Geoff Dixon years, who all became top bosses in their own right at other airlines. It's fair to say I invested lots of $$$ and time into Qantas over 36 long years. But it only took a few years...
Took my first QF flight in 1980 and was a loyal customer for decades until about 2014, during Joyce's tenure. Along the way, I got to personally know three department heads from the James Strong and Geoff Dixon years, who all became top bosses in their own right at other airlines. It's fair to say I invested lots of $$$ and time into Qantas over 36 long years. But it only took a few years for Joyce to destroy that and drive me (and thousands of formerly loyal customers) into the arms of Virgin Australia and Singapore Airlines. Somebody here mentioned how they're happy that Joyce drove value for shareholders. That's a very narrow perspective, indeed. Those of us in business know that the 'holy trinity' consists of employees, customers, and shareholders. When you concentrate only on the latter and actively combat the first two, there comes a time when your short-sighted approach will eventually implode you and the company. A real leader will find a balance between the three. That was not Joyce's way.
Alan Joyce was one of the greatest CEO to run Qantas. He took the share price from $1.00 to over $6.50. I made some good money. Thanks Alan for your service.
Anecdotally, the arrogance of Mr Joyce has ensured that many 'rusted-on' QF flyers are decamping to airlines with fresher and less expensive premium offerings. The final straw for many was Mr Joyce's refusal to return to Australia to face questions from the Australian parliament as to his handling of the airline and selling the majority of his QF shares worth around $AUD 17 million which heralded the wiping of his hands of the erstwhile beloved...
Anecdotally, the arrogance of Mr Joyce has ensured that many 'rusted-on' QF flyers are decamping to airlines with fresher and less expensive premium offerings. The final straw for many was Mr Joyce's refusal to return to Australia to face questions from the Australian parliament as to his handling of the airline and selling the majority of his QF shares worth around $AUD 17 million which heralded the wiping of his hands of the erstwhile beloved airline (well, at lease within Australia). This was all prior to the release of the report documenting and condemning his toxic leadership; although the evidence will come as no shock to the flying public.
I share your sentiment, only I went to Etihad (& Virgin on points)
Our cancel culture today measures decisions of the past in terms of the ethics or mores of the current time. Nothing more obvious that this hatchet job.
During covid some measures were taken because of extreme caution that have now been deemed bad decisions in light of covid not being much worse than a bad cold for most.
DEI is terrible and eventually sanity will prevail and the best most qualified people will...
Our cancel culture today measures decisions of the past in terms of the ethics or mores of the current time. Nothing more obvious that this hatchet job.
During covid some measures were taken because of extreme caution that have now been deemed bad decisions in light of covid not being much worse than a bad cold for most.
DEI is terrible and eventually sanity will prevail and the best most qualified people will be chosen for important jobs. Successful minorities will always wear the stigma of being the DEI choice and hate DEI.
The revenge of the board will hopefully be exposed to legal challenge.
Were you going for gold in the stupidity Olympics, with this?
Wrong.
Joyce's actions were called out at the time as being unethical and immoral, which is why he had ongoing disputes with unions, and many people were against him back then. There's no change since.
What changed was that the actual indicators of how much brand damage he had done came out last year - that isn't reflected immediately as it's a lagging indicator. And since then more _evidence_ came out of unethical decisions he...
Wrong.
Joyce's actions were called out at the time as being unethical and immoral, which is why he had ongoing disputes with unions, and many people were against him back then. There's no change since.
What changed was that the actual indicators of how much brand damage he had done came out last year - that isn't reflected immediately as it's a lagging indicator. And since then more _evidence_ came out of unethical decisions he had taken just to make money, that were unjustly taking away from customers. And Qantas was fined for that.
So it's nothing to changing attitudes now. Just the evidence and results of his poor actions in the past.
As an Australian, Qantas was once a proud exportable brand, one all Aussies got behind. The eroding of brand value is a national shame and all happened with him at the helm. Commercial is important, of course. He has shareholder responsibilities- but it has been possible to meet those while still caring for other considerations - like safety, employee relations, consumer experience and reputation. I’ve had a longstanding business travel relationship and loyalty to Qantas...
As an Australian, Qantas was once a proud exportable brand, one all Aussies got behind. The eroding of brand value is a national shame and all happened with him at the helm. Commercial is important, of course. He has shareholder responsibilities- but it has been possible to meet those while still caring for other considerations - like safety, employee relations, consumer experience and reputation. I’ve had a longstanding business travel relationship and loyalty to Qantas and like many I know it’s now become a “what best suits my routing and budget” as opposed to a brand loyal decision. And that’s sad. The general Aussie reaction to Qantas, when brought up at a BBQ or boardroom isn’t pride. It’s eye rolling, or ranting derision or indifference, and their staff don’t deserve that. It was his doing. And it’s nothing for him to be rewarded for or proud of.
If you want to know why Alan Joyce remained CEO for so long, and was allowed to run the company the way he did, look at Qantas's stock price.
Mr. Joyce started as CEO on Nov. 8, 2008, and announced his resignation Sept. 5, 2023. Between Nov. 10, 2008 (the first trading day after Joyce became CEO) and Sept. 5, 2023, the stock appeared to have had a pretty decent run.
On Nov. 10,...
If you want to know why Alan Joyce remained CEO for so long, and was allowed to run the company the way he did, look at Qantas's stock price.
Mr. Joyce started as CEO on Nov. 8, 2008, and announced his resignation Sept. 5, 2023. Between Nov. 10, 2008 (the first trading day after Joyce became CEO) and Sept. 5, 2023, the stock appeared to have had a pretty decent run.
On Nov. 10, 2008, Qantas's stock opened at AUD2.79. On Sept. 5, 2023, it closed at AUD5.84. In between, it appears to have hit a low of AUD1.145 in June 2012, and peaked in Nov. 2019 at AUD7.30 (I used Yahoo Finance's historical stock price information as my source). Presumably, the airline's stock price reflected the airline's P&L performance.
Yes, the Board should have paid more attention to the airline's culture, policies, actions, etc., and raised concerns with Mr. Joyce. Unfortunately, too often airline Boards tend to focus on financial performance, major capital expense-related decisions (e.g., aircraft purchases/leases), and "strategy," which leaves little room for anything else. I wouldn't be surprised if Mr. Joyce would socialize with his Board members as well.
In a healthy environment, a company's Board members should have the ability to directly - and confidentially - reach out to key executives to get their takes on how things are going at the business. I don't know if this happened at QF, though if Board members did do this, they didn't did so effectively.
As others here have pointed out, people generally don't get appointed to major corporate Boards if they have reputations for being confrontational or in any way appear that they would intentionally challenge the CEO. The perks of being on the QF Board, which likely included free first class travel (plus "bragging rights"), are compelling enough to (literally) buy a Board's compliance and complacency.
I won't be surprised if Qantas's performance under Mr. Joyce's leadership, Mr. Joyce's performance as CEO (including his forced compensation forfeiture), and the airline's BoD role in all of this becomes a business school case study. Of course, the same business schools that may teach this case are also the ones teaching their students how to get onto corporate Boards, thus self-perpetuating the problem.
Joyce was in the top job for far too long. He'd become an autocrat, with a slavishly obedient executive and a fawning, neutered Board of Directors kowtowing to his every diktat. He was fanatically obsessed with cost-cutting, which inevitably eroded the quality of the customer experience from website to baggage delivery. Qantas embraced hyper-progressive political causes, which a good number of customers found to be inappropriate and alienating. The fleet renewal strategy was virtually non-existent...
Joyce was in the top job for far too long. He'd become an autocrat, with a slavishly obedient executive and a fawning, neutered Board of Directors kowtowing to his every diktat. He was fanatically obsessed with cost-cutting, which inevitably eroded the quality of the customer experience from website to baggage delivery. Qantas embraced hyper-progressive political causes, which a good number of customers found to be inappropriate and alienating. The fleet renewal strategy was virtually non-existent for the best part of two decades, apart from the small 787-9 order.
Hopefully change is in the air. The Board definitely needs to go, and in my opinion it would be most useful to replace the CEO with fresh blood recruited from a successful overseas carrier - and no, not Akbar Al Baker, thanks.
Qantas already has a new CEO. However for all his flaws (cant count too many), he stood up to the thugs (the unions). He did not care for customers, staff and Unions only about himself (Narcissist).
I meant they need another new CEO to replace the loyal Joyce functionary who took over from him.
I laugh about Allan Joyce's bottom line! Isn't he already Gay!
ATTENTION: American Airlines Board of Directors. Are you reading this?!
.. just to add a little extra spice to the sorry tale, Richard Goyder decided to "fall on his sword / retire", effective Monday 16 September 2024 - no doubt inspired by the rampant public disgust and calls for a "clearing of the Board decks". Who is Richard Goyder, you ask? Why, he is/was Chairman of the QF Board. It's notable that two other Board members have also similarly moved on as well, since the...
.. just to add a little extra spice to the sorry tale, Richard Goyder decided to "fall on his sword / retire", effective Monday 16 September 2024 - no doubt inspired by the rampant public disgust and calls for a "clearing of the Board decks". Who is Richard Goyder, you ask? Why, he is/was Chairman of the QF Board. It's notable that two other Board members have also similarly moved on as well, since the AGM last February. Gonna be interesting to see how Doug Parker (ex AA) fits in, now. At least the new Chairman (recently hired and not a QF Board member at the time) has a solid transport background and will have quite some room to establish some new ideas,
Moral of the story? Yes Blanche - the Qantas Club is the network of domestic Qantas passenger lounges - but there are those of us that think it has an entirely different meaning .. if you're on the Board. As @Tom suggested, not a good idea to alienate your customers. Even Board Chairs have 'half-lives' down under.
Adding onto what @Tom said below, Australia is actually a little better than the USA when it comes to the BoD.
Australia has strong shareholder rights, so it's far easier to place pressure on the company.
Shareholders are customers too, which was why they actually voted against Alan Joyces pay package last year.
They voted last year, after all the bad news came out.
But were complicit in supporting him in the 15 years prior to then... because shareholder returns were good.
The usual lack of principles caused this.
Ed Bastian, you're next
Here's hoping.
His arrogance is off the charts. He's destroying what Anderson and others have built.
I've never seen a company so blatantly tell prospective customers that "if you're not on a corporate expense account, you simply do not matter to us."
Ben, the issue is you don’t seem to understand how boards of very large corporates work. Most Fortune-type company boards have a decent number of former executives who make a career out of sitting on multiple boards and often know each other through friends / former colleagues, etc. There is zero incentive for them to rock the boat, ever challenge the decisions of executives etc. as then they won’t be invited to join more boards...
Ben, the issue is you don’t seem to understand how boards of very large corporates work. Most Fortune-type company boards have a decent number of former executives who make a career out of sitting on multiple boards and often know each other through friends / former colleagues, etc. There is zero incentive for them to rock the boat, ever challenge the decisions of executives etc. as then they won’t be invited to join more boards and accumulate more $250K a year roles for attending a few meetings a year. I assume Australia will be even worse, since it’s a smaller economy more important not to burn bridges / be labelled a trouble-maker.
This is why regulators are important for many industries and why the US approach to capitalism is increasingly broken, but that’s a separate topic…
Ding ding ding.
This is why the BoD are almost never interventionist.
Those directors on the board of (insert company here) would never get those jobs in the first place is they had this kind of track record or history.
What a great comment, Tom! Very insightful, thank you for this.
Qantas and their entire management team should go to Jail. Clawing back some bonuses is not enough for the pain they caused thousands of employees and customers.
Drain the swamp at Mascot.
@Fek - totally spot on - it will take years for confidence to return in the brand , he single handedly destroyed a once great company and was left unchallenged and paid handsomely for it - go figure - she’s no different - nothing will change
Oh no....poor overpaid millionaire
Vanessa is cut from the same cloth, but just a little smarter and doesn’t stick her face infront of a camera the same way Joyce did. She’s taking the approach of keeping a low profile. Unfortunately for her the mistakes of the past 15 years is coming home to roost, in the form of old jets, no spare parts, lack of qualified resourcing, ground time to fix the issues and a lot of outsourcing to 3rd party ground handling with poor performance and products
She has been there for 30 years. She is not just cut from the same cloth, she is the cloth.
And entirely responsibly for the bad culture past and present
Installing the long-time CFO into the CEO role was a terrible decision and shows just how bad the board at Qantas is.
The thing going in her favour is the Aussie Market. As they are the dominant airline with Virgin Australia (VA) far second. Furthermore, VA has branding issues with their partners. They nearly went under during COVID all the Credit card partners had to stop the partnership. They are on the return path. VA does not belong to the airline alliance nor offers life time membership.
Literally every player in the Australian industry vertical usually...
The thing going in her favour is the Aussie Market. As they are the dominant airline with Virgin Australia (VA) far second. Furthermore, VA has branding issues with their partners. They nearly went under during COVID all the Credit card partners had to stop the partnership. They are on the return path. VA does not belong to the airline alliance nor offers life time membership.
Literally every player in the Australian industry vertical usually the dominant is tied up with Qantas for points earning.
Aussies love to travel and Qantas have the Politicians in their pockets giving them Chairman lounge and other perks. They hoard busy airport slots especially Sydney and Melbourne so that the competition cannot get a foothold.
Till there is real competition, this is just a small bump in QF journey.