Qantas chief executive Alan Joyce’s pay packet has swelled to $11.9 million.
A week after reporting the largest financial turnaround in Australian corporate history, Qantas said Joyce was awarded $6.9 million in shares in 2014/15, as part of long-term incentives.
His base salary of $2 million, plus almost $1 million in short-term share based bonuses, took his annual pay to almost six times the $2 million he took home in the previous year.
In response to this announcement, Qantas’ Chairman Leigh Clifford released a statement offering a rundown on the executive pay packets.
“These payments are substantial, so deserve some explanation,” Clifford said.
“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.
Clifford added that in recent years, poor financial performance resulted in a number of pay freezes for many Qantas staff, and for the poor old execs, there had been no pay rise for three years.
Short term bonuses went AWOL in 2013, and long term bonuses had also received the chop back in 2009. Last year, Joyce’s take home pay was also cut by 40%, Clifford added.
“The payments to executives are being made because some very tough performance hurdles have been met and exceeded,” he said.
“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.”
As a bit of background, Clifford made note of the fact that exec pay at Qantas is closely linked to company performance, hence the ceo salary freeze since 2011, 40% pay cut last year and no annual incentives for Joyce in two of the past four years.
Joyce’s remuneration between 2011 and 2014 was also in the bottom 25th percentile of ceo pay in Australia.
Qantas announced a planned capital return to shareholders valued at $505 million and a related share consolidation, subject to shareholder approval at the 2015 AGM.