The Qantas Group has released its 2020 Annual Report, which provides detailed disclosures on its financial and non-financial performance – as well as executive remuneration – for the year ending 30 June 2020.
The report shows that the Group was performing well against key targets before the COVID-19 crisis struck in March. Government travel restrictions and border closures resulted in an 82 per cent drop in revenue between April and end-June and a 91 per cent drop in Underlying Profit Before Tax for the full year.
In light of these profound challenges, the Board and Executive Management elected to take no salary for three months. Annual bonuses that would have otherwise been paid based on non-financial performance targets were forgone.
Shares awarded under the Group’s Long Term Incentive Plan in 2017 vested at 50 per cent. This was based on the Qantas Group ranking first among peer airlines for its share price performance over a three year period, even after factoring in the impact of the COVID crisis. The total value of these shares received by Executive Management was less than the base pay they gave up in FY20.
Combined, these factors resulted in total executive pay for FY20 dropping by 69 per cent compared with FY19.
The Group CEO’s total pay dropped by 83 per cent (from $9.9 million in FY19 to $1.7 million in FY20). This larger drop was due to Alan Joyce offering – and Board agreeing – for him not to receive the 343,500 shares associated with his long term incentive from 2017. A decision on whether these shares will ultimately vest or lapse has been deferred until at least August 2021.
The Chairman and Group CEO continued their period of zero pay during July before moving to 65 per cent of base salary/fees from 1 August. The rest of the Board and Executive Management have received 85 per cent of their base pay/fees since July.
COMMENTS FROM THE CHAIRMAN
Qantas Chairman Richard Goyder said: “The COVID crisis is having devastating impact on aviation for obvious reasons. Qantas has the ability to get through this, but ongoing border closures mean we’re still not in recovery mode despite Australia’s overall success in handling the pandemic.
“When travel restrictions first hit, Alan and the management team acted quickly to put most of the business in hibernation and develop a recovery plan. Liquidity has been strengthened and difficult decisions are being made as part of carving out $15 billion in costs over the next three years. Sadly, this has a very real impact on thousands of our people.
“Management and the Board showed important leadership by taking no salary for several months and then a reduced salary for months after that. This is obviously not the same hardship as those stood down or facing redundancy, but it comes at a time when demands on management are greater than ever.”
The Qantas Group’s 2020 Annual Report can be accessed here.
 Executive Management defined as the Group CEO and their direct reports.