Qantas docks Joyce $6.1 million in governance overhaul

Qantas Airways Ltd. docked A$9.3 million ($6.1 million) from former Chief Executive Officer Alan Joyce’s final payout and announced a governance overhaul after a review partly blamed board and management errors for the carrier’s reputational crisis.

The long-anticipated verdict on Joyce’s remuneration follows an internal review of the string of damaging events after the pandemic that led to Joyce’s premature departure in September 2023. The money clawed back represents close to half of Joyce’s total planned pay last year and includes all the Qantas shares set aside for him as a long-term incentive.

The airline’s problems included a surge in cancellations and lost bags, accusations from the regulator that Qantas sold tickets on flights it had already scrubbed from schedules, and a court ruling that Qantas illegally fired about 1,700 ground staff. Joyce had “overall accountability and responsibility for the outcomes of the business,” Qantas said in a statement.

Joyce’s pay cut reflected the conclusions of an internal report released by Qantas on Thursday that identified a series of board and management failings in the final months of Joyce’s 15-year tenure. 

Business adviser Tom Saar, hired by Qantas to carry out the investigation, found there was excessive deference toward Joyce, who’d overcome previous crises, and decisions weren’t sufficiently challenged. There was too much focus on financial and commercial goals and not enough attention on customers and staff, Saar said.

The public release of the report suggests Qantas is taking a more transparent and less confrontational approach under Joyce’s successor, Vanessa Hudson. The findings themselves largely cement the long-held perception that Qantas and its then-dominant CEO Joyce failed passengers and staff in the wake of Covid-19 as the airline raced to return to profit.

Qantas’s board and management are taking steps to address all 32 recommendations in Saar’s report, the airline said. Many of the required actions have already been completed or are underway, it added. Still, the review concluded that the damage to the airline is yet to be fully repaired.

“There is still a significant amount of work to be done to rebuild the trust of all stakeholders,” Qantas Chairman Elect John Mullen said.

In his report, Saar listed five root causes of the airline’s crisis.

An Australian group representing institutional investors including pension funds described the airline’s announcement as “an important step in Qantas’ governance reset.” Ed John, executive manager of stewardship at the Australian Council of Superannuation Investors, said “it is critical that the company learns from the mis-steps identified and the new board puts all of the recommended changes into practice.”

Saar also recommended additional scrutiny of Qantas stock trades by the CEO and senior managers after Joyce sold A$16.9 million of shares in the airline, the bulk of his holdings, in June 2023. The shares plummeted in the weeks that followed as Australia’s competition watchdog accused the airline of selling seats on thousands of so-called ghost flights.