Joyce takes a $9.26m hit to final payout as Qantas board denies his incentives

The fallout for Joyce follows the release today of a governance review by Qantas initiated last year, with the scale of Joyce’s pay cut reflecting his oversight of the business at a time when it suffered a “loss of trust amongst stakeholders”.

Qantas’ reputation has been rocked by multiple findings that were led by the High Court upholding a ruling that the company breached the Fair Work Act when it outsourced 1,700 ground handler jobs in 2020.

More recently, the Federal Court ruled that Qantas had breached consumer law after cancelling flights on 86,000 ticketholders while continuing to advertise them for sale between 2021 and 2023.

“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,” says the company.

The Qantas board last year withheld paying the balance of FY23 short-term incentives for its senior executives pending the governance review.

While the company says there were “no findings of deliberate wrongdoing, the review found that mistakes were made by the board and management which contributed to the group’s significant reputational and customer service issues”.

Joyce was given a $21.4 million golden handshake when left the airline last year but was eligible for a top up in shares for long-term and short-term incentive payments.

However, the remuneration board today has announced that Joyce will have to forfeit all of the shares, worth $8.36 million, held on his behalf in relation to the FY23 long-term incentive plan.

Joyce’s short-term FY23 incentive has also been cut by 33 per cent, up from a previously announced 20 per cent, shaving another $900,000 from his payout.

The remuneration board has also reduced the short-term incentives of affected senior executives, some of them still with the company, by 33 per cent. This has led to total cuts of $4.1 million in FY23 short-term incentives that were to be paid by Qantas.

“In reaching these decisions, the board has considered the individual and collective accountability of members of the group management committee,” says Qantas.

“The board has also taken into account their performance in bringing Qantas through the pandemic and the challenges of standing up the airline through that period.

“The combination of these factors is reflected in the reduction in the short-term incentives.”

Qantas says Joyce, as CEO, had “overall accountability and responsibility for the outcomes of the business”.

“Current non-executive directors who were on the board at the time will take a 33 per cent reduction to their directors’ base fees this year,” says the company, adding that further details will be released in the FY24 remuneration report.

The cuts in executive pay pale in comparison with the hefty fines faced by Qantas following the two high-profile legal actions brought by regulators.

The “ghost flight” episode which saw passengers buying tickets for flights that had already been cancelled was prosecuted by the Australian Competition and Consumer Commission and led to a Federal Court penalty of $100 million.

Qantas also agreed to a $20 million customer remediation program.

Penalties for breaching the Fair Work Act, in relation to the outsourcing of ground crew, are yet to be handed down.

In revealing the governance review findings, Qantas chairman elect John Mullen says it provides “clear direction for the board and management to build a better, stronger Qantas and restore pride in the national carrier”

“It’s important that the board understands what went wrong and learns from the mistakes of the past as it’s clear that we let Australians down,” says Mullen.

“As the national carrier it is our duty to make sure we always act in the best interest of stakeholders and hold ourselves to the highest level of accountability.”

Mullen points to CEO Vanessa Hudson’s progress since her appointment last year.

“But there is still a significant amount of work to be done to rebuild the trust of all stakeholders,” he says.

“The implementation of the recommendations in the report will result in stronger governance and better decision-making within Qantas and ultimately better outcomes for our stakeholders.”