The Australian airline, Qantas, has significantly reduced the bonuses of its former CEO and Irish national, Alan Joyce, by over A$9.3 million (€5.6 million). This is in light of the harm inflicted on the company’s standing within his final year of service. This decrease comes as a result of an assessment initiated in 2023, examining the managerial operations and organisational culture of Qantas, also known as the ‘Flying Kangaroo’. This investigation was carried out in a year marked by a plummeting share price for Qantas, following discoveries that the airline was involved in ‘ghost flights’ sales and unlawfully dismissed 1,700 staff members.
Alan Joyce, who resigned in the preceding year after spending 15 years as the company’s leader, became the primary subject of displeasure for both customers and shareholders. Revelations surrounding Joyce’s scheduled exit compensation of up to A$24 million (€14.4 million) sparked widespread dissatisfaction among shareholders, prompting over 80% of them to vote against the company’s wage policy during the annual meeting in November.
The findings of the assessment, released on Thursday and overseen by McKinsey’s Tom Saar, underscored an overreliance on a long-serving CEO at Qantas. It was also determined that Joyce’s ‘command and control’ management approach contributed to the root causes of the crisis that engulfed the firm in 2023. The report indicated that Qantas’ board was heavily focussed on fiscal, commercial, and strategic elements but should have also considered the firm’s employees and clientele.
Propelled by the review’s suggestion, the Qantas board elected to reduce Joyce’s short-term and long-term bonuses since the company’s reputation suffered greatly during the post-pandemic phase.
The board decided to reduce the short-term bonuses given to top executives by a third, which represents about A$4.1 million, incorporating close to A$1 million that would have been allocated to Mr Joyce. The decision extended to forfeiting Mr Joyce’s entire long-term incentive bonus, which was unpaid but due between 2021 to 2023, of nearly A$8.4 million. However, even after these deductions, Mr Joyce received A$14.9 million during the fiscal year ending in June, 2023.
No immediate statement or comment was given by Mr Joyce on the matter.
John Mullen, who is set to succeed Richard Goyder as Qantas chair in September, believes the pay alterations and reconsideration of leadership will allow the new management unit to revive the airline’s reputation.
Mr Mullen added that it was integral for the board to comprehend the mistakes made and learn from them as it was evident they had let Australians down.
Mr Joyce had been incessantly defending his actions and potential bonus, attributing it to the airline’s speedy financial recovery following its near demise during the Covid-19 pandemic.
The airline’s decision to terminate 1,700 ground and baggage staff during the pandemic was subsequently deemed illegal, paving the way for a customer service crisis that frustrated passengers. Moreover, the corporate regulator sued the airline the following year for promoting tickets for already cancelled flights. This instigated a 20% drop in share price, and Qantas ultimately conceded to deceiving customers and is now paying an A$100 million penalty as a result.
Transport Workers’ Union’s national secretary Michael Kaine did acknowledge initial indications that Qantas had started rectifying its practices. However, he criticised Mr Joyce for causing what he referred to as the ‘demise of an Australian icon’.
Kaine underscored the importance of the review as it corroborated the belief held by the workers, passengers and the Australian public for years, that Qantas was governed by a timid board that was unable to confront CEO Alan Joyce. He aimed his criticism at Joyce for championing a harmful ‘profit at any cost’ mentality.
Despite past grievances, the airline, currently under Vanessa Hudson’s leadership, has significantly invested in upping its customer service standards and reliability. Its foothold in the increasingly profitable domestic aviation sector has remained steady, regardless of the turbulence. This is even more significant given the collapse of low-cost rival Bonza and Rex, the regional airline going into administration this year. The information sourced from The Financial Times.