Access denied to the Million Dollar Club

Every year travelbulletin publishes The Million Dollar Club - but in 2020/21, after 18 months of facing the biggest crisis the sector has ever known, the formerly fat pay packets of those at the top are looking decidedly skinny. As Bruce Piper uncovers, some previous high flyers can no longer get past the velvet rope letting them into the VIP section of the club.

Every year travelbulletin publishes The Million Dollar Club - a list of the top earning executives across Australia’s publicly listed travel and tourism companies. But in 2020/21 there’s something different for those at the top, because after 18 months of the biggest crisis the sector has ever known, those formerly fat pay packets are looking decidedly skinny. In fact for some previous high-flyers they can no longer get past the velvet rope letting them into the VIP section of the club. BRUCE PIPER investigates.

There’s no doubt that the COVID-19 pandemic has led to belt-tightening right across the travel and tourism industry. Thousands of jobs have been lost, while many of those who remain within the sector are scraping by on savings or meagre scraps of business, as border closures and restrictions continue to impact the ability to trade. Profitability has been slashed, and as companies preserve cash the thought of dividend payments from those on the ASX has been a far-fetched dream - and that in turn has had a direct impact on the take-home pay of some of our key industry leaders who were previously heavily remunerated as they took their share of the bounty.

Nowhere is this more apparent than in the listed travel agency sector, where the former high flying heads of Flight Centre, Helloworld and Corporate Travel Management have all taken a massive haircut. This year’s analysis of the remuneration reports of these companies shows that Flight Centre MD Graham Turner, Helloworld CEO Andrew Burnes, Helloworld Executive Director Cinzia Burnes and Corporate Travel Management CEO Jamie Pherous took home less than a tenth of their income in 2019/20 - which was itself already impacted by three months of pandemic trading. Their 90%-plus pay cuts reflected the significant equity holdings in their respective businesses, which previously meant even a small dividend payment resulted in a nice cheque every time it was allocated.

You’d almost have to feel sorry for Flight Centre’s Graham Turner this year, who in percentage terms has taken the biggest hit of those who regularly appear in the list. His $651,000 total package for 2020/21 was just 4% of the previous year, when thanks to a pre-pandemic dividend from Flight Centre which was at the time trading extremely strongly he earned almost $17 million. And incredibly, that in turn was only a fraction of his 2018/19 income which was an eye-watering $47 million, due to a one-off special dividend announced by the company in response to threatened changes to the treatment of franking credits. He received no bonus, no share-based payments and no dividends this year, meaning he had to survive on his relatively parsimonious $650,000 base salary. Turner’s senior executive team all received significantly more than he did this year, including CFO Adam Campbell ($2 million), CEO Leisure Melanie Waters-ryan ($1.9 million), CEO Corporate Chris Galanty ($1.8 million), MD Australia James Kavanagh ($1.27 million), MD The Americas Charlene Leiss ($1.21 million) and MD EMEA Steven

“You’d almost have to feel sorry for Flight Centre’s Graham Turner this year, who in percentage terms has taken the biggest hit of those who regularly appear in the list. ”

Norris ($1.1 million).

It was a similar story at Helloworld, where a controversial dividend payout in March last year announced at the same time as the company’s Board was formulating plans to stand down hundreds of staff - meant that Andrew and Cinzia Burnes each took home more than $4.5 million despite the onset of the pandemic. This year, with dividend payments and bonuses suspended, not to mention the impact of voluntary pay cuts, the pair were lucky to scrape into the top 20 travel agency top earners. CEO Andrew Burnes’ remuneration was just $421,271 for the year, a 91% decline on the 2019/20 figure, while Executive Director Cinzia Burnes received $388,040, down 92%. In fact the pair earnt less than two of their direct reports, with Helloworld CFO David Hall the company’s top earner this year with a $580,000 package, followed by Group GM Corporate, Nick Sutherland, who was paid around $490,000.

Corporate Travel Management CEO Jamie Pherous was also among those who were relatively poverty-stricken by the lack of dividends. His 2019/20 income was a pretty healthy $5 million including dividends in the company where he is one of the largest shareholders. It was different in 2020/21, where despite

“Again his subordinates did better than the boss, with Global Chief Operating Officer Laura Ruffles receiving more than $1.6 million including $850,000 in share-based payments. ”

seemingly navigating the pandemic in reasonably good shape, with the CTM share price having seen a significant rebound, there has again been a prudent approach to conserving cash and not paying dividends, meaning he subsisted on his base package of $492,904, down 90% on the prior year. Again the subordinates did better than the boss, with Global Chief Operating Officer Laura Ruffles receiving more than $1.6 million including $850,000 in share-based payments. Corporate Travel Management CEO North America Kevin O’malley took home $677,000; the company’s CEO for Australia/nz, Greg Mccarthy, received $596,000; while

Debbie Carling, CEO Europe was paid $548,000, so all of these executives received more than the company’s founder and CEO.

Webjet rounds out the listed travel agency businesses, and its CEO John Guscic actually appears at the top of the table for travel agent top earners this year, with a statutory remuneration package of just over $2.4 million. Direct comparisons are tricky, because Webjet has a different reporting schedule to most of the other travel businesses on the ASX, and its most recent annual report covers the 12 months to 31 March. Guscic’s statutory income included more than $1.6 million in share-based compensation, with the company’s board rejigging his package to include a grant of Webjet options, after all legacy long-term incentives were forfeited in 2020/21. Webjet’s Group

Chief Commercial Officer, Shelley Beasley, had a total income of $803,000, while the company’s CFO Tony Ristevki received almost $700,000 for the year. We’ve summarised the top 20 travel agency earners in table 1.

FLYING HIGH-FLIERS

IN THE aviation sector the packages received by those at the top were not as heavily impacted last year, primarily because those most senior in our airlines continue to receive most of their remuneration in the form of salary rather than as dividends. Yes, they all took pay cuts during the darkest days of the pandemic, but it’s hard to feel sorry for those in the top 10 where the lowest package was still worth

“With Qantas not paying any dividends, the carrier’s CEO had to be content with just sitting on his 2,980,810 shares this year. ”

almost $1.6 million. The relaunch of Virgin Australia as a privately owned company has been a disappointment from the point of view of us fat cat voyeurs, because we no longer have insight into what those at the top of our second largest domestic carrier receive. Unfortunately at the moment we have to be content with Qantas and the frustratingly opaque information from Air New Zealand, which under NZ listing rules does not have to specifically report what individual key management personnel receive apart from the CEO.

Like almost everyone in travel and tourism, last year perennial aviation top earner Alan Joyce took a cut to his cash take home pay, with a base salary of $1.78 million. However, because of the way share-based payments are reported his overall package actually increased and was worth more than $5.2 million, including $3.5 million for options which will vest in the future under the Qantas Long Term Incentive program for its top brass. With Qantas not paying any dividends, the carrier’s CEO had to be content with just sitting on his 2,980,810 shares this year.

Others at the pointy end of the Qantas executive cabin included Jetstar CEO Gareth Evans with a $1.9 million income, up 47% on the previous year, as well as CEO Domestic and International Andrew David who received a total package worth $1.8 million, a 61% yearon-year increase. CFO Vanessa Hudson received a total package worth $1.64 million (almost double her 2020 income), just ahead of Qantas Loyalty CEO Olivia Wirth on $1.58 million, up 70%. Similar to their boss, much of the increases came through share-based long term incentive payments.

Over at Air New Zealand, CEO Greg Foran’s first full year at the company saw him receive just over $3.5 million, including a $900,000-plus cash bonus.

Apart from spelling out the CEO’S

remuneration Air NZ’S annual report only details the number of employees in specific income bands, but although we don’t know exactly who’s who, we do know there were senior executives who received $2.45 million,

$2.36 million, $2.13 million and $1.88 million. We’ve had a stab at who’s who in the zoo in our table of Airline Top Earners (pictured in table 2).

Other listed airlines include Regional Express and Alliance Airlines. For the second year running, Rex Executive Director Lim Kim Hai took nothing whatsoever home for the carrier. He generally takes no salary at all, and bases his income on dividends which were once again non-existent in 2020/21. Alliance Airlines, which has certainly made the most of the pandemic, saw its CEO Scott Mcmillan receive just over $700,000 for the year, including about $25,000 in dividends.

ACCOMMODATION, ACTIVITIES, TECHNOLOGY AND MORE

THE rest of the travel and tourism ecosystem suffered as well, with almost no sign of a dividend.

The one exception was Sealink Travel Group, which underwent a well-timed merger with Transit Systems Group in early 2020. The

“...the top three earners in this year’s travelbulletin Million Dollar Club were former Crown executives who departed amid the controversy with some pretty handy golden handshakes. ”

At the exclusive Hakkasan nightclub in Las Vegas, a bottle of Jay-z’s ‘Ace of Spades’ champagne doesn’t come cheap, with the 30-litre ‘Midas costing a cool $500,000 per bottle. So to put the salaries of the top execs into real terms, this chart shows how many bottles they could buy on a big trip to Sin City.

diversification of its income base to now include public transport coach operations across the globe has put Sealink in good stead, meaning its new CEO Clint Feuerherdt was paid $2.6 million for the year, including $580,000 in dividends.

And as well as suffering through pandemic restrictions and lockdowns, resort giant

Crown Limited faced its own significant challenges through various enquiries in NSW, Victoria and Perth. Crown didn’t pay any dividends, but even despite that, the top three earners in this year’s travelbulletin Million Dollar Club were former Crown executives who departed amid the controversy with some pretty handy golden handshakes. Todd Nisbet, former Crown Limited Executive Vice President of Strategy and Developments walked away with $6.6 million for the year, just ahead of the company’s former CEO and MD, Ken Barton on $6.27 million, and CEO Australian Resorts Barry Felsted, with $4.7 million.

Matt Bekier, CEO of Crown’s rival Star Entertainment Group earnt $3.06 million, while other top earners included Ardent Leisure’s

Chris Morris with $3.03 million and Event Hospitality CEO Jane Hastings on $2.82 million. Again the lack of dividends meant former top achievers in this miscellaneous sector like Luke and Karl Trouchet from Apollo Tourism and Leisure were in relative penury, with packages worth $530,000 and $252,000 respectively. Experience Co’s John O’sullivan received just under $750,000 for the year, meaning he was just outside the top 15 list (pictured in table 3).

THE 2021 MILLION DOLLAR CLUB

SO WRAPPING it all up, the 15 top earners in travel, tourism and aviation this year (pictured in table 4) were heavily weighted towards the gaming operators, with Crown’s Nisbet and Barton even outstripping Qantas CEO Alan Joyce. In fact the only travel agency personalities in this illustrious company were Webjet’s John Guscic who came in 12th, while Flight Centre CFO Adam Campbell scraped in at 15th position. With the uncertainty of COVID-19 it’s unclear how the league tables will change over the next year, but with many predicting a massive rebound - which should ultimately lead to profitability and some of those precious dividend payments - it’s likely that next year’s Million Dollar Club will look decidedly different. We can only hope.