Statement from Leigh Clifford AO, Qantas Chairman
Qantas has today released its annual report for the 2017 financial year, including disclosures on executive pay.
When we started our turnaround program three years ago, we set very clear performance targets for senior management and linked them to the bonus scheme. About 97 per cent of shareholders voted to approve this approach.
The Qantas turnaround was designed and led by the management team, and the results are clear. Qantas is now one of the best performing airline groups in the world. The company’s market value has risen from $2.5 billion to $10 billion. We have generated around $3.5 billion in profit. We have strengthened our balance sheet, delivered strong returns to shareholders and ordered new aircraft.
The share price has risen by about 350 per cent over three years. And the value of executive bonuses, which are mostly paid in Qantas shares, have risen with it. Shares that were worth $1.26 when they were awarded in 2014 are being paid out when they are worth $5.72. In the case of Alan Joyce, the rise in the share price increased his total remuneration from $10.1 million to $24.6 million.
There is no question that these pay outcomes are high. That’s because they reflect the company’s exceptional performance, including our top ranking for total shareholder return among global airline peers and every company on the ASX100.
For a business that was facing an uncertain future three years ago, and was in no position to pay bonuses to any of its people, the fundamentals that underpin today’s pay disclosures show how far we have come.”
- The executive bonuses paid this year were set in 2014 as part of a three year long term incentive plan that was connected to the airline’s $2 billion turnaround plan. The success of the turnaround has therefore driven significantly higher bonuses in 2017 than what is expected in future years.
- As a result of the successful turnaround more than $220 million has been set aside over the past three years to pay bonuses to around 25,000 non-executive Qantas staff.
- Executive remuneration at Qantas is closely linked to company performance. The Group CEO took a 5 per cent pay cut and executives received no bonuses when Qantas recorded a financial loss in 2014.
- There has been no increase in the Group CEO’s base pay since 2011. No bonus was paid in either 2012 or 2014 and bonuses in 2013 were paid out at 38 per cent of the total as performance fell short of targets required to vest in full.
- Executive pay is voted on by Qantas shareholders each year at its AGM.