Executive compensation is an especially contentious topic in the US, though it seems we’re not alone.
Qantas CEO Was Australia’s Highest Paid Executive
There’s now widespread coverage around compensation for executives in Australia during the 2018 fiscal year, with Australia’s highest paid executive being Qantas CEO Alan Joyce.
He took home nearly 24 million AUD, making him the highest paid ASX100 CEO. His 23,876,351 AUD in compensation just barely beat out Macquarie Group’s CEO earning 23,855,580 AUD.
To me that’s pretty remarkable. While airline CEOs are generally well paid, I can’t think of another situation where an airline executive was the top paid executive in the entire country.
As a point of comparison, the previous year Joyce earned “only” ~11.2 million AUD, making him the eighth best paid executive in the country.
So, how did he earn so much, and how did his pay jump that much? His base pay was just over 2 million AUD, and a large part of that compensation came in the form of the increased stock value.
It’s pointed out that Qantas’ value increased from 2.5 billion AUD to 10 billion AUD during that period, so the share price increased by about 350%.
While there will be strong opinions on both sides for executive compensation, we can all agree that’s a period during which Qantas did really well. To what extent the CEO should be rewarded for that (rather than employees) is something that’s up for debate.
Comparing That To Another CEO
In my opinion what’s much worse is when CEOs at airlines get compensated well for poor performance. I’m not thinking of any airline in particular, but theoretically:
- Imagine if you ran an airline where the stock price started the year at $52.33 and ended the year at $32.09
- Imagine earning pre-tax profits of $1.9 billion, or $2.8 billion excluding net special items, when you promised that your airline would earn a minimum of $3 billion in profits in a bad year
- Imagine still earning $12 million, and being the second highest paid airline executive in the US
Like I said, this is all theoretical. 😉
What do you guys think — is Alan Joyce’ nearly 24 million AUD in compensation well deserved, or excessive?