Alan Joyce gets $5m+ pay package

[leemin]

Shareholders also voted to approve the controversial pay package for chief executive Alan Joyce, valued in excess of $5 million, prompting a shareholder walkout.

:shock: Wow!

(Live: Qantas AGM | Qantas Boss Alan Joyce and Unions Face Off)


Glad I'm a Virgin Australia shareholder..

 

[yohy?!]

The institutional investors still support the board, they put this across the line.

 

[JohnK]

Yeah why wouldn't the big boys support the big boys. Unfortunately though somewhere along the way they have lost touch with reality.

Anyone wonder why we have financial troubles through out the globe?

 

[rockyroad]

Yeah why wouldn't the big boys support the big boys. Unfortunately though somewhere along the way they have lost touch with reality.

Anyone wonder why we have financial troubles through out the globe?

Interesting the talk that the QFi loss may be creative accounting to gain support for Qantasia. What the unions are doing and the growing losses may just be playing to AJ's plan that Qantasia is the future.

 

[The Rok]

The people who invest in Qantas support his package. Therefore they think he is doing a Good job. Weather we think he is or nor is irrelevant. The Qantas share holders and it's frequent flyers have very different objectives. It's easy for us all to be arm chair critics.

How many people here would honestly put their names forward fir Alan Joyce's job

 

[thewinchester]

As I've gone into on another thread today, the media, the unions and members around these parts haven't correctly reported this. Here's the actual breakdown of his salary, quoting my earlier post in part:

Joyce's salary package for FY2010/11 is set at AUD 6.02m, of which only AUD 2.04m is cash salary.

The remaining AUD 3.98m is [entirely an at risk component and] only payable when Joyce has delivered against the medium and long term targets set as part of his remuneration package, which was voted on and approved at their AGM last year. I wasn't able to discern from the meeting if the allocation of ~1.7m shares (which form part of the Qantas Long Term Incentive Plan - LTIP) is reliant on the meeting of goals and forms part of the AUD 3.98m figure.

You can read more in the above thread, including how it's determined if Joyce qualifies to receive the at-risk component of his remuneration package.

And based on what Joyce has done and continues to put in motion, he's worth every cent. Sure, vocal shareholders like Tillburn will carry on calling Joyce and the board members Fascists and running a regime like Col. Gaffafi (I'm not joking, this was said by a speaker from the floor) will moan until the cows come home - but they, and dare I say most of us here, don't understand 20% of the work he puts in and goes through to keep the company one of the most profitable legacy carriers globally with an investment grade credit rating.

As hinted at by The Rok, how many people would honestly want to do Joyce's job. And if Joyce wasn't doing well, how long do you think the institutional shareholders - the ones whom have a real clue about what's going on, and the work involved navigating the minefield that is running an airline - would allow Joyce to stay around and draw his salary and LTIP? I posit he'd be gone faster than you can finish making another cup of coffee.

 

[JohnPhelan]

Interesting the talk that the QFi loss may be creative accounting to gain support for Qantasia.

It would be much more interesting - and credible - if the unions could produce some evidence of this. They keep saying it, but never produce any facts to support it.

It would seem they have no such evidence, just a theory they would like to be true, as it would support their cause.

Wishing for something to be true does not make it so. They need to either put up, or shut up, about this. Repeating a fabrication over and over again does not make it true.

 

[moa999]

Was interesting that the company chose to proactively tackle a number of qns.

Accounting - everything is user pays based on commercial agreements between individual entities (eg jq pilots on qf flights). have given pilots union time with auditor and offered full independent audit on the condition that if clean the unions withdraw this complaint

Fleet - 80 planes in last three years of which 60% have gone to Qantas not Jetstar. International has 38% of the capital of the business tied up in it.

Aircraft age - avg qantas age has come down last few years - now below most global legacies. purchases over next few years will bring it down further to 9.5

Aircraft fleet - spirited defence given as to why qantas hasn't ever ordered a 777. Basically not every aircraft suits every airline and need to keep simple fleets. In 1995 the, first 777-200 wouldn't make syd-lax so ordered 747er instead. In early 2000s ordered the A380 instead as seeing impact of slot congestion at lhr and lax. More recently ordered 787 over 777 as newer aircraft with lower costs. First Qantas group delivery 2013.

Qantas Asia - all about being able to provide connections into Asia. At present most qf flights get into sin/bkk/hkg late at night so they can continue to lhr and land just after curfew. This however meqns no good connections to rest of Asia and Qantas loses this business. Aim of RedQ/oneAsia is to be firstly anle to get you to destination in qantas metal and secondly to help support morning services to asia that will enable these connections

Joyce salary - as noted above its roughly 2 cash, 2 short, 2 long.
short is things like profit, safety on time performance - last year got 60-70% of tbis, seemingly mainly bssed on profit.
long is totak shareholder return, or share price plus divs, pretty much got zip here.
total cash last uear about 3.6 of a max of 6. Some weird accounting standards on some of the three year stuff, which is pretty complex, means they have to report a headline of closer to 5

 

[VHOEJ]

The institutional investors have a lot of say but they have a lot of money invested too - they stand to lose more than anyone if the airline goes under.

 

[Robert K]

Another AJ salary beat up -.-

Virgin didn't even make a profit last year, should JB not get paid altogether?

 

[elbarto]

The institutional investors still support the board, they put this across the line.

The institutional investors have a lot of say but they have a lot of money invested too - they stand to lose more than anyone if the airline goes under.

The problem is, the institutional investors tend not to bother voting. So the chairman directs all uncast votes in favour of the resolutions. The proxy voting system need to be changed as boards are getting away with having resolutions they have a vested interest in passing because of lazy shareholders. If uncast votes were taken as a voter abstaining from the vote, particularly on matters of remuneration which cause so much outrage, then half the resolutions would never get through.

The people who invest in Qantas support his package. Therefore they think he is doing a Good job. Weather we think he is or nor is irrelevant. The Qantas share holders and it's frequent flyers have very different objectives. It's easy for us all to be arm chair critics.

How many people here would honestly put their names forward fir Alan Joyce's job

I invest in Qantas and I don't think he's doing a good job. I don't know that I would put my name forward for his job unless I had complete ownership of the airline.

 

[leemin]

Another AJ salary beat up -.-

Virgin didn't even make a profit last year, should JB not get paid altogether?

I don't deny that the media love a good CEO bashing. And given I'm not a shareholder, wasn't about to p and research the breakdown of AJ's salary package before linking to the story.

However, I think a CEO's performance based on profit is dependent on where the starting point was.

In the case of Qantas it seems at least some frequent flyers are annoyed, mum and dad investors are annoyed, and the unions appear to see no end to their disputes, all from a starting point of Australia's best (only?) full service carrier.

I'd see warning signs for the future. Particularly in relation to the equity the Qantas brand itself has.

 

[moa999]

The problem is, the institutional investors tend not to bother voting. So the chairman directs all uncast votes in favour of the resolutions. The proxy voting system need to be changed as boards are getting away with having resolutions they have a vested interest in passing because of lazy shareholders. If uncast votes were taken as a voter abstaining from the vote, particularly on matters of remuneration which cause so much outrage, then half the resolutions would never get through.

I think you will find most of the instos voted. Almost all the resolutions got passed by a margin of 98 for 2% against, although the rem report was 96/ 4

 

[Robert K]

In the case of Qantas it seems at least some frequent flyers are annoyed, mum and dad investors are annoyed, and the unions appear to see no end to their disputes, all from a starting point of Australia's best (only?) full service carrier.

the top 20 shareholders hold 80+% of qf shares. Mum and dad investors can be annoyed and vocal as they want, but they really have no influence.
Unions see no end to their disputes because they themselves are the problem.

 

[medhead]

The problem is, the institutional investors tend not to bother voting. So the chairman directs all uncast votes in favour of the resolutions. The proxy voting system need to be changed as boards are getting away with having resolutions they have a vested interest in passing because of lazy shareholders. If uncast votes were taken as a voter abstaining from the vote, particularly on matters of remuneration which cause so much outrage, then half the resolutions would never get through.

I think you will find most of the instos voted. Almost all the resolutions got passed by a margin of 98 for 2% against, although the rem report was 96/ 4

That is a consequence of the voting system that elbarto was referring to. Basically the proxy form gives the Chairman the ability to direct their votes as he sees fit, it also automatically gives the proxy vote to the chairman. Both of these work on an opt out basis. So instros sign the proxy form, post it in and voila the Chairman of the meeting has their vote and can direct it as they see fit, i.e. for the resolutions.

Overall, I think people are putting way too much faith in institutional investors - they are locked in with golden handcuffs. They have to invest in companies like Qantas due to their market weight. It is in their best interest to not rock the boat. There have been a few examples, over the last 10 years or so, of institutions doing nothing when whole boards should be sacked. NAB is a prime example. A positive example is when institutions blocked the privatisation of qantas. The way the institutions tend to react is by going short in companies that they don't like. Rather than look at the vote at the AGM, it would be more illustrative to comparing the holdings of various institutions with the market weight of Qantas. If institutions weren't locked in to holding the market weight of the top 200, +/- X%, and could sell down to nothing we might actually see them exercising some proper oversight. Until then, as someone has already mentioned here, the institutions what the least disruption to maintain the illusion of a sound investment and protect their money. They are not going to sack a board or even a CEO.

Edit: And for the record, the total number of issued Qantas shares is 2,265,123,620. The voting record for the AGM shows no more than ~1,600,000,000 share were voted, only about 70% of issued capital.

 

[Moody]

CEOs prove their worth when they successfully navigate the company through rough times or periods of business change. The jury is well and truly out on whether AJ will do this, but he is off to a bad start and I don't believe he is earning his pay.

It is quite possible that members of the board and intitutional investors feel the same way, but as has been pointed out it is unlikely they will admit as much due to self-interest.

 

[moa999]

getting off topic but most of the votes (about 1600m) were directed in favour of the resolutions and not left to chairmans discretion. it should also be noted that most of those large shareholders are fund managers who look after our super, as well as foreign money

on the takeover bid, whilst i agree that it would not have been good for the airline and employees - yours and my super balance would look better - the share price does not look like getting to $5 any time soon.

That said had the bid been successful i suspect much like air nz, the govt may own a fair chunk of qantas

 

[medhead]

getting off topic but most of the votes (about 1600m) were directed in favour of the resolutions and not left to chairmans discretion. it should also be noted that most of those large shareholders are fund managers who look after our super, as well as foreign money

on the takeover bid, whilst i agree that it would not have been good for the airline and employees - yours and my super balance would look better - the share price does not look like getting to $5 any time soon.

That said had the bid been successful i suspect much like air nz, the govt may own a fair chunk of qantas

Ok I was late with my edit , but no more than 1600 million shares were voted in Total on any resolution. There is also the missing 30% of shares that were not voted at all. So I don't think we can fairly say that the AGM vote, or almost any other AGM vote, is truly reflective of shareholder views on the remuneration report. Especially, as the remuneration vote is non-binding anyway. Basically, AGM votes are practically meaningless IMO.

Edit: And for the record, the total number of issued Qantas shares is 2,265,123,620. The voting record for the AGM shows no more than ~1,600,000,000 share were voted, only about 70% of issued capital.

The problem with the takeover bid was it substantially destroyed shareholder value. (And was a dodgy set up by the board) Otherwise, I'm sure the institutions would have supported it. That Joyce has trashed the shareprice so comprehensively since then is a good reason to be critical of him.

 

[thewinchester]

getting off topic but most of the votes (about 1600m) were directed in favour of the resolutions and not left to chairmans discretion. it should also be noted that most of those large shareholders are fund managers who look after our super, as well as foreign money.

On the director's proxy question, what moa999 has posted is correct. There was on average no more than a couple of million proxy votes allocated to chairman's discretion.

A breakdown of QF's biggest shareholders is included in their annual report on pg. 109 (which is the norm for publicly traded entities) which is extracted from the share registry.

I've quickly screen-captured the relevant chunks of that page, as it would be impossibly time consuming to present it here in a tabular form.



The only interesting names on that list are The Senior Master of the Supreme Court, which is an entity of the Victorian Court system used to administer funds in its care. This would suggest that a large portion of QF shares are being held in trust for a minor, as part of probate, or another legal matter.

The other interesting name is Woodross Nominees P/L. This is most likely a holding company who uses these shares as part of an investment portfolio, and after additional searching using Dow Jones Factiva confirmed they are a wholly controlled entity of Macquarie Group Limited (aka Macquarie Bank, and it took a bit of digging to confirm it was one of theirs).

Further, there is a list of entities who've notified the company that they are substantial shareholders who might not be reflected in the above list.

 

[harvyk]

Before you jump up and down in defence of institutional investors, remember that some pretty big companies have gone against the wall taking "institutional investors" with them. Yes they have a lot more money invested, but it's not like they have a crystal ball or have access to any better information than the average "mum and dad".

As for AJ getting a $5m pay package, meh... Good on him for convincing companies to part with that sort of money. As I frequently say, the amount you get paid rarely has any basis on the job you do, but rather your ability to look after number one.