Bonuses for the former chief executive of Qantas, Alan Joyce, may need to be paid back as the airline giant battles through damaging lawsuits and public backlash over allegations it sold seats on already-cancelled flights.
Mr. Joyce was paid $21.4 million for the 2022-2023 financial year, but $14.4 million of this is currently under review.
“In recognition of the customer and brand impact of cumulative events, the Board has applied its discretion to reduce short-term incentives for senior executives,” Chairman Richard Goyder said.
The airline giant was able to recall $8.3 million of share-based bonuses Mr. Joyce collected during the 2022-2023 financial year but is not yet allowed to sell it.
The company could also “clawback” uninvested stock bonuses for Mr. Joyce, which include $3.9 million in pro-rata business earnings and $2.2 million in short-term bonuses.
“A total of $14.4 million is subject to malus and clawback if considered necessary,” Mr. Goyder said.
This comes after Mr. Joyce ended his tenure on Sept. 5—two months before his official departure date—following allegations by Australia’s corporate watchdog that the airline giant engaged in deceitful advertising and sold tickets for flights that had already been cancelled.
“The best thing I can do under these circumstances is to bring forward my retirement and hand over to Vanessa and the new management team now, knowing they will do an excellent job.”
Qantas’s Chief Financial Officer Vanessa Hudson was selected as his replacement following a formal vote by the company shareholders at Qantas’ Annual General Meeting in November.
Despite the news, Qantas made a profit of $2.47 billion during the 2022-2023 financial year amid strong travel demand and high ticket prices following the pandemic.
This is comparable to the previous financial year, when the airline giant made a $1.86 billion loss.
Airline Giant Could Be Fined ‘Hundreds of Millions’
The ACCC launched legal action against Qantas in Australia’s Federal Court on Aug. 31.The corporate watchdog alleges that between May and July 2022, Qantas sold tickets on more than 8,000 flights for more than two weeks, and in some cases for over one month, after the cancellation of flights.
The ACCC also alleges that for more than 10,000 flights scheduled to depart in May to July 2022, Qantas did not notify existing ticketholders that their flights had been cancelled for an average of about 18 days, and in some cases for up to 48 days.
Additionally, the corporate watchdog alleges that for 70 percent of cancelled flights, Qantas either continued to sell tickets for the flight on its website for two days or more, delayed informing existing ticketholders that their flight was cancelled.
“We think the penalties should be in the hundreds of millions, not tens of millions, for breaches,” ACCC Chair Cass-Gottlieb told ABC Radio National on Sept. 1.
Airline Says ‘Customer Outcomes’ Now a Factor in Remuneration
Mr. Goyder said the board will place weight on “customer outcomes” for the current financial year and has introduced it as a metric for “future long-term incentives.”“While the ACCC’s recent allegations are untested, the Board understands shareholder and community concerns about them coinciding with significant executive pay outcomes.”
Mr. Goyder added that while the company has “much work to do,” it cannot lose sight of the “many positives.”
“This includes the fact we are tackling the current challenges with strong financial foundations, in stark contrast to the past few years, giving us the ability to invest in customers, new aircraft and more people,” he said.
