The Qantas board will cut former CEO Alan Joyce’s massive payout by $9.26 million after admitting to mistakes by the Board and management which contributed to the group’s “significant reputational and customer service issues”. There were no findings of deliberate wrongdoing.

The board has now determined that Joyce will have his FY23 remuneration reduced by $9.26 million. Other executives, including new CEO Vanessa Hudson also face a 33 per cent reduction in short-term bonuses.

This consists of:

• Under forfeiture provisions which apply to the Long Term Incentive Plan (LTIP), the Board has determined that 100 per cent of the shares held on his behalf in relation to the 2021-2023 LTIP, valued at $8.36 million, will be forfeited.
• A 33 per cent reduction in his short-term incentive in FY23 valued at approximately $900,000 (inclusive of the previously announced 20 per cent reduction).
• The Board has also determined that the short-term incentives for affected current and former senior executives will also be reduced by 33 per cent. Inclusive of Joyce’s reduction, the overall reduction in the FY23 short term incentives is approximately $4.1 million.

Qantas chairman-elect John Mullen said the review provides clear direction for the Board and management to build a better, stronger Qantas and restore pride in the national carrier.

“It’s important that the Board understands what went wrong and learns from the mistakes of the past as it’s clear that we let Australians down,” Mullen said.

“As the national carrier it is our duty to make sure we always act in the best interest of stakeholders and hold ourselves to the highest level of accountability.”

In addition to the Joyce payout, the board admitted that the events that damaged Qantas and its reputation and caused considerable harm to relationships with customers, employees and other stakeholders were due to a number of factors.

As part of a settlement with the ACCC, Qantas has admitted to misleading customers in relation to flight cancellations processes and subject to Federal Court approval will pay a $100 million penalty.

Qantas has also agreed to a $20 million customer remediation program. Penalties and compensation arising from breaches of the Fair Work Act are still to be determined.

New CEO ‘delivering better outcomes’

Mullen said new CEO Vanessa Hudson and her new management team had already made significant progress during her tenure.

“Vanessa and her new management team have made positive progress towards delivering better outcomes for customers and employees, but there is still a significant amount of work to be done to rebuild the trust of all stakeholders, but there is still a significant amount of work to be done to rebuild the trust of all stakeholders”.

The review, started in October 2023, considered matters over the preceding 12 months, and scrutinised the decision-making and governance processes of the Board that led to the loss of trust amongst stakeholders.

Qantas CEO Vanessa Hudson’s apology on Twitter.

The review involved external and internal input on several separate key governance matters identified by the Board. The Board appointed experienced business adviser Tom Saar to review these matters and present areas of improvement to the Board.

The Board, led by chairman Richard Goyder and chairman-elect John Mullen, and the management team have committed to implementing actions to address all 32 recommendations in the report, with many actions already completed or underway.

These include:

• Changes implemented to increase more detailed reporting to the Board on customer metrics, employee engagement and key stakeholder relations.
• Amendments made to the Group’s remuneration framework.
• Tightened protocols for the approval of share trading by the Group CEO and senior management.
• Enhanced Board consultation and approval required for involvement in significant stakeholder and community issues.

These actions are in addition to organisational changes, including the appointment of two new independent non-executive directors and the commencement of a transition to a new chairman and senior management renewal with the early commencement of a new Group CEO.

Update on board renewal

Qantas Chairman Richard Goyder announced in October 2023 that he would retire prior to the Annual General Meeting (AGM) in October 2024.

Goyder has confirmed that his last day with Qantas as chairman and non-executive director will be Monday 16 September 2024.

John Mullen, who joined the Board in April this year and has been chairman-elect, will then assume the role of chairman. Mullen’s position on the board will be put to a shareholder vote at the AGM.

Qantas chairman Richard Goyder’s last day as chairman and non-executive director will be Monday 16 September 2024. (Sky News)

“The implementation of the recommendations in the report will result in stronger governance and better decision-making within Qantas and ultimately better outcomes for our stakeholders. I’d like to thank Tom Saar for his work on the review,” Mullen said.

“On behalf of the Board, I’d like to recognise the contribution that Richard has made during almost six years as Chairman of the Qantas Board, particularly guiding the airline through the unprecedented challenges faced during the pandemic.”

Independent business advisor Tom Saar said: “The task set by the Qantas Board in bringing together the elements of the Governance Review was instigated with a genuine desire to improve the Group and ensure the mistakes of the past led to lessons learned and improved governance.

“Many of the actions taken by Qantas in response to the recommendations are complete or well underway.

While some of the recommendations will take some time to embed across the organisation, if the current momentum is maintained, my expectation is that tangible benefits will occur within a short period.”