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…
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?
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