Qantas content to reward CEO $ 25m
Townsville QANTAS Airways chief Alan Joyce is corporate Australia’s $ 25 million man after being richly rewarded for piloting the airline’s stunning turnaround.
And his chairman, Leigh Clifford, has insisted the mammoth pay cheque for the past year – up from $ 12.9 million the previous year – has been well earned.
Mr Joyce’s eye- watering salary, confirmed in Qantas’s annual report yesterday, hit the stratosphere this year thanks to the company’s meteoric rise in fortunes just three years after it posted a record $ 2.84 billion loss.
Back then, Qantas looked like it was going to need a Federal Government guarantee on its debt to retain its credit rating.
But in the years since, the group’s $ 2 billion cost- cutting plan has helped deliver a rise of more than 350 per cent in its share price, effectively going from chicken feed to caviar, with Mr Joyce chief among the beneficiaries.
About $ 14.5 million of his pay this year has come from the vesting of shares awarded under an incentive plan introduced when the airline was at its lowest ebb.
That sum dwarfs his base salary of $ 2.1 million, which was unchanged from a year ago, with the remainder made up from a combination of short and long- term bonuses.
The payout could have been even greater had Mr Joyce and his executive team hit more targets under the short- term incentive plan, with only two out of seven categories – including for flight punctuality and dom- estic market dominance – scoring full points.
Mr Clifford told shareholders yesterday the board had been vindicated in linking senior management’s performance targets to the bonus scheme because “the results are clear”.
“There is no question that these pay outcomes are high,” Mr Clifford said. “That’s because they reflect the company’s exceptional performance, including our top ranking for total shareholder return among global airline peers and every company on the ASX 100.
“For a business that was facing an uncertain future three years ago, and was in no position to pay bonuses to any of its people, the fundamentals that underpin today’s pay disclosures show how far we have come.”
The revival also follows a tumultuous period in which the airline’s chief of the past nine years famously grounded the fleet during an industrial dispute, slashed more than 1000 jobs and lost a trusted lieutenant to his fiercest rival.
In the past three financial years, Qantas has posted pre- tax underlying profits – tallies that strip out one- off items – of $ 975 million, $ 1.5 billion and $ 1.4 billion.
Qantas yesterday also announced it would be reweighting future bonus plans towards long- term incentives to “further align the CEO to Qantas’s longer- term objectives”.
Analysts described the adjustment as “reasonable”, pointing out the volatile nature of both the industry and fuel prices meant a long- term focus was preferable.
“Qantas has a pretty good fuel hedging system in place ( but) competition, particularly in its international division, will remain a challenge over the long- term,” Morningstar analyst Adam Fleck said.
Shareholders will vote on the remuneration scheme next month.