Qantas admits ‘loss of trust’ after investor backlash over pay

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Shareholders in Australian airline Qantas have voted against the company’s executive pay and bonus scheme, with 83 per cent of investors refusing to back the advisory remuneration report.

“It is clear there’s been a substantial loss of trust in the national carrier and we understand why,” outgoing chair Richard Goyder told shareholders at the company’s annual meeting on Friday after what he called an “overwhelming” vote against the pay policy.

Under Australia’s “two strikes” rule, a vote can be held to dissolve the board if shareholders reject a company’s remuneration policy for two consecutive years.

The vote against the company’s pay policy at its annual meeting in Melbourne caps a turbulent three months for the airline. Qantas suffered a customer services meltdown at the start of the year but nonetheless reported underlying pre-tax profit in the year ending in June of A$2.5bn ($1.6bn) and a healthy outlook in August.

The company was sued by the Australian consumer regulator a week after reporting the results for alleged “false, misleading and deceptive conduct”. The Australian Competition and Consumer Commission accused the carrier of selling tickets for thousands of so-called ghost flights that it had already cancelled.

A week later, a court upheld a ruling that Qantas had illegally sacked 1,700 workers during the pandemic, a move that cut costs for the company but also resulted in a collapse in its customer service quality as ground-staff including baggage handlers were outsourced.

The company known as the “Flying Kangaroo” now faces a potential bill of hundreds of millions of dollars in penalties and compensation for those workers.

Its long-serving chief executive Alan Joyce stepped down earlier than expected, and its chair and two board members have said they will also leave. Qantas shares have lost almost a fifth of their value since August.

The Qantas board apologised to investors at the annual meeting and promised to restore the airline’s brand status and customer service reputation.

It also highlighted that it had cut executive bonuses and incentive payments for the year, withholding all payments until there was clarity on the cost arising from the legal cases.

The board amended the bonus policy for future years to demand higher levels of customer satisfaction in order for incentives to pay out. It also stressed that it had the right to claw back A$14.4mn in Joyce’s bonuses for the past year depending on the outcome of the legal cases.

All other resolutions passed. There was a large vote against the re-election of Todd Sampson, a former advertising executive and television personality, in protest at the company’s brand damage.

Investors also criticised the board for allowing Joyce to sell A$17mn worth of Qantas shares weeks before the consumer watchdog’s legal action was launched.

Two new board directors were approved at the annual meeting, including former US Airways chief executive Doug Parker, as part of an overhaul of the airline’s governance and management.