The board of Qantas will cut former chief executive Alan Joyce’s final renumeration by more than A$9.2 million ($6 million), contending that some of his leadership decisions caused “considerable harm” to the airline’s reputation.
On 8 August the board decided against awarding the full A$23.6 million payout even though there was “no deliberate wrongdoing” by Joyce or by his team. Joyce, the carrier’s chief executive for 15 years, abruptly stepped down in September 2023, two months earlier than planned
The cut will come from both long-term and short-term bonuses: Joyce will forego 100% of shares held as part a long-term incentive plan from 2021-23, valued at A$8.36m, and will also see a 33% reduction in short-term incentives, valued at around A$900,000.
“While 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,” it adds.
Current and former senior executives under Joyce’s tenure – including current chief executive Vanessa Hudson who served as Joyce’s finance chief – will also see their short-term bonuses cut by 33%. Current non-executive directors who sat on the airline’s board at the time will see their base fees slashed by 33% this year.
The cuts in bonuses follows the release of a governance report detailing the “mistakes” that hurt the Qantas brand.
In the final months of Joyce’s tenure, the airline was hit by a string of controversies, such as customer service issues, as well as a legal battle with the Australian competition regulator for the alleged sale of thousands of seats on flights that never took off.
The governance report, which scrutinised the Oneworld carrier’s decision-making processes for the 12 months to October 2023, outlines several key factors that “underpinned” the governance lapses.
On airline leadership, it found that Qantas had a “command and control” style, where decisions were centralised under an “experienced and dominant CEO”.
“This contributed to a top-down culture, which impacted empowerment and a willingness to challenge or ‘speak up’ on issues or decisions of concern except in relation to safety matters,” the report states. It calls for “more rigorous and comprehensive cultural monitoring”.
The report also found that Qantas’ “strong safety culture was not representative of the leadership culture”, where there was “at times” a tendency to place financial performance over other non-financial risks apart from safety.
“There was a tendency for emerging risks, particularly non-financial risks, to be assessed on an individual, rather than cumulative basis, with the result that the overall impact of potential combined risk actualisation may be under-estimated in assessments and contingency planning,” the report states.
