Today, Qantas released its annual report. The report outlines the successful turnaround that everyone at Qantas is contributing to, and of which we can be very proud.
This report also has the executive pay of our top executives – including Alan Joyce and CEOs of our key businesses.
These payments are substantial, so deserve some explanation.
In recent years, our poor financial performance has resulted in pay freezes for many people at Qantas. For Executives, there have been no pay rises for three years, no short term bonuses since 2013 and no long term bonuses since 2009. Last year, Alan Joyce’s take home pay was cut by 40 per cent.
The size of payments executives will receive this year are due to the strong turnaround of the company. In particular, the numbers are driven by the market value of Qantas itself, which has increased from $2 billion to around $8 billion over the past three years. This means that share rights awarded when our share price was around $1 in 2012 have vested at a time when they are worth about $3.50.
The payments to executives are being made because some very tough performance hurdles have been met and exceeded. The number of share rights awarded and the performance hurdles that determine whether they are paid to the CEO were agreed to by more than 98 per cent of our shareholders at our 2012 AGM.
The turnaround is also enabling us to pay up to 28,000 staff a share of $90 million in bonuses, in acknowledgement of the 18 month wage freeze they have agreed to. On top of this, we’ve just set aside another $10 million to give all non-executive staff $400 of Qantas travel. This means a total of $100 million has been set aside for non-executive staff.
BACKGROUND FOR MEDIA
· Executive pay at Qantas is closely linked to company performance, which is why:
– the CEO’s salary has been frozen since 2011;
– the CEO had a 40 per cent cut in take home pay last year;
– the CEO did not receive an annual incentive in two of the past four years (2012 and 2014), and only received partial awards in the other two years (2011 and 2013).
· Alan Joyce’s remuneration between 2011 and 2014 was in the bottom 25th percentile of CEO pay in Australia.
· The largest item in the CEO’s remuneration outcome is the vesting of shares under the three year long term incentive plan (LTIP), approved by Qantas shareholders at the 2012 AGM. It is because the Qantas share price has more than tripled (from around $1 to more than $3.50) over the past three years – and shareholders have correspondingly benefitted – that the value of these LTIP shares has also tripled.
· Senior executive incentives are only triggered by strong company performance. The remuneration outcome for senior executives in 2015 reflects one of the biggest turnarounds in Australian corporate history, driven by the benefits of the $2 billion Group transformation, which was led by senior management and for which they were accountable.
· This is the first time in five years that company performance has been strong enough to trigger payment under the long term incentive plan for executives.
· Qantas shareholders approve executive remuneration and incentive plans. Approval for the plans underpinning the payments announced today were supported by more than 98 per cent of shareholders.
· Qantas was the best performing stock among ASX100 companies in 2014/15.
· Qantas has announced a planned capital return to shareholders valued at $505 million and a related share consolidation, subject to shareholder approval at the 2015 AGM.