In a significant development, the exit package of Qantas’ former chief executive has been reduced following a comprehensive governance review. This move comes as the airline seeks to address issues that have marred its reputation, particularly errors made by senior management and the board.
The review meticulously examined the airline’s decision-making processes over the past year, highlighting critical governance errors without finding any deliberate wrongdoing. The decision to amend the exit package reflects Qantas’ commitment to restoring stakeholder trust by taking accountability for past mistakes.
Governance Review and Its Findings
The governance review of Qantas was an extensive examination aimed at evaluating the decision-making processes and management practices adopted by the company’s board. Despite no findings of deliberate wrongdoing, the review underscored various mistakes that significantly impacted the airline’s reputation and stakeholder relations.
The review period, covering 12 months leading up to October 2023, identified a series of managerial errors. These errors resulted in the loss of trust among stakeholders, including customers and employees, necessitating corrective actions to regain confidence and ensure future governance improvements.
Impact on Exit Packages
Following the review, the most notable outcome was the slashing of the former CEO Alan Joyce’s exit package. Originally slated to receive a substantially larger payout, Joyce will now face a reduction of A$9.26 million in his exit package. This adjustment reflects the company’s acknowledgment of the issues highlighted in the governance review.
Additionally, shares valued at $8.26 million under the 2022-23 Long-Term Incentive Plan (LTIP) have been forfeited, further demonstrating the board’s determination to enforce accountability. These financial penalties signify a strong message about corporate governance and the consequences of ineffective management.
Repercussions for Senior Executives
Short-term incentives for current and former senior executives will also see a 33% reduction. This approach was deemed necessary as part of Qantas’ strategy to address the corporate and customer service challenges that arose during the review period.
Qantas had previously announced a 20% reduction in short-term incentives for FY23, acknowledging the challenges affecting customer and brand perception. This decision, aligned with the Australian Competition and Consumer Commission (ACCC) proceedings, emphasises the far-reaching impact of managerial decisions on stakeholder satisfaction. Furthermore, the board withheld final short-term incentive payments as a response to recent court findings.
Accountability Measures and Legal Consequences
Qantas’ accountability measures extend beyond financial penalties. The airline has admitted to misleading customers regarding flight cancellations, leading to a settlement with the ACCC. The settlement includes a proposed A$100 million penalty, subject to Federal Court approval.
A customer remediation programme, valued at A$20 million, is also part of Qantas’ efforts to rectify past discrepancies. These measures, alongside pending penalties for Fair Work Act breaches, signify the airline’s commitment to comprehensive stakeholder redress and ethical accountability.
The Former CEO’s Legacy and Management Transition
Alan Joyce, who served as CEO for 15 years, guided Qantas through various crises, including the global financial crisis and the COVID-19 pandemic. However, his early departure in 2023 came amidst escalating governance challenges.
Following Joyce’s departure, Vanessa Hudson, the former chief financial officer, stepped in as CEO, marking a new era for Qantas. Hudson’s leadership is focused on rebuilding trust and steering the airline towards more robust stakeholder relations and improved governance standards.
The board, evaluating both individual and collective executive performance, asserts that the accountability measures imposed on Joyce and other senior figures are justified. These actions are intended to reflect the years of management challenges and to support Qantas’ recovery efforts.
Board and Management Accountability
John Mullen, the chairman-elect, emphasises the importance of learning from past errors to guide future governance. He stated the company’s dedication to upholding the highest standards of stakeholder accountability.
Qantas has committed to implementing review recommendations, which are anticipated to improve governance structures and decision-making processes. These changes are integral to restoring stakeholder confidence and fortifying the airline’s reputation.
Qantas is undertaking significant steps to rectify past governance issues by revising executive exit packages and implementing accountability measures. These efforts, spearheaded by the new CEO, aim to restore trust among stakeholders and improve corporate governance. As the airline implements recommended changes, it is poised to emerge stronger and more resilient, with a renewed focus on integrity and transparency.
