His time in charge was marked with repeated controversy, and his departure came two months ahead of schedule – designed to stem the bleeding as Qantas weathers a damaged reputation.
Joyce jets off with a substantial amount of money in the bank and Qantas shares in his portfolio – but valid questions are being asked about whether he is entitled to all of it, including his widely reported $24 million ‘golden handshake’ retirement package.
So, is he likely to walk away with the full deal, or could he be prevented from cashing it in? Here’s what we know.
How much will Joyce receive?
To be blunt, he’s estimated to have made an eye-watering $125 million during his time at the airline.
It seems like a lot of money because it is, but needs to be understood in the context of his longevity and how Qantas rewards its executives.
Joyce joined the airline in 2000, after spending four years at the now-defunct Ansett Australia. Before he joined Ansett in 1996, he worked for Ireland’s flag carrier Aer Lingus for about eight years.
In November 2008, Joyce became Qantas’ CEO, succeeding Geoff Dixon, who spent seven years in the top job.
As CEO, Joyce was entitled to receive a base salary of about $2 million a year, on top of annual bonuses issued as Qantas shares, depending on his (and the airline’s) performance.
This year, on top of his base salary of $2.2 million, Joyce was due to receive a short-term cash bonus of $4.3 million as at 30 June.
Qantas is required to disclose this amount in its annual report, as it has done in years prior, which is due out sometime this month.
But Joyce is also owed about 3.1 million shares, including 1.4 million from previous bonuses deferred during the pandemic at Joyce’s request, and the rest from previous issuances.
Joyce is entitled to those 3.1 million shares, referred to as LTIPs (long-term incentive plan), because he satisfied his performance criteria by reaching measurable goals.
Some of those shares have been issued – the 1.4 million shares owed from the COVID-19 years were issued last Friday, with a value of about $10 million.
The remaining 1.7 million shares, however, are yet to be issued. And when they are, Qantas must disclose it within five business days.
Assuming all those shares are vested (converted to ordinary shares), the total value would be about $17.7 million based on Wednesday’s closing share price of $5.70, which has fallen in the past week in response to recent reputational headwinds.
Joyce also sold most of his $17 million worth of Qantas shares in June, which was done with the approval of the airline’s board.
Adding his $4.3 million cash bonus to the equation, his ‘golden handshake’ final payout is valued at about $22 million.
There is nothing stopping Joyce from selling his Qantas shares in the future, provided they convert to ordinary shares. Because he has now resigned from Qantas, those sales would not need to be disclosed.
Who decides whether he gets the bonus?
While Qantas is a publicly listed company (meaning you can buy and trade its shares on the Australian stock market), shareholders get no more say on Joyce’s payout than they would on what planes the airline purchases.
The decision is totally at the discretion of the Qantas board.
But the board could also revoke or restructure the payout – we just don’t know yet.
Technically, the board could pay the money and shares he is owed right now, because Joyce is already entitled to receive it. He has satisfied the performance criteria for those 3.1 million shares, and has already received a letter advising him of his short-term cash bonus outcome of $4.3 million (in the corporate world, this is known as ‘letter day’).
But given Qantas is currently in turmoil, the board may choose to put conditions on his payout. One possibility is they could tie what is owed to Joyce to the outcome of the ACCC inquiry, or defer it and resolve to make a decision once that legal action ends.
Whether the board decides to impose conditions or not, it will need to be disclosed at some point, because the airline’s Remuneration Report has to be provided at the Qantas annual general meeting (AGM).
The board is under enormous pressure to be transparent. Although shareholders don’t have a say in whether he is paid, their frustrations are being heard.
Qantas executives have been meeting with major shareholders in the past day or so to smooth over and ‘reset’ relations.
Those meetings will continue through the rest of this week, and may well continue into the next.
Is Qantas reconsidering Joyce’s bonus?
It certainly appears to be a very live possibility on the Qantas boardroom table right now.
Chairman Richard Goyder told The Australian on Wednesday: “If you look at our Remuneration Report, there are provisions for clawbacks.”
Qantas’ annual report for the 2022 financial year notes that the airline’s executive remuneration framework has a “clawback mechanism available in the event of serious misconduct, breach of obligations to the group, or a material misstatement in Qantas’ Financial Statements”.
Under that, it lists the Qantas board could decide:
- an executive should forgo some or all awards otherwise due under the short-term incentive plan (STIP)
- some or all STIP shares that are subject to a deferral period and/or one-year trading restriction be forfeited
- cause some or all LTIPs or RRPs (reverse repurchase agreement) that haven’t yet vested to lapse, or those that have converted to shares are subject to a trading restriction be forfeited
- in the case of serious misconduct, cancel any post-employment benefits for the relevant employee where possible.
Although it mentions the Qantas board, that decision is made after a recommendation comes from the Remuneration Committee, which is made up of five board members: Jacqueline Hay, Maxine Brenner, Michael L’Estrange, Todd Sampson, and Doug Parker.
Has Qantas ever denied a payout?
Qantas is not required to disclose if it has denied someone a payout or their entitlements.
That said, it would be considered very unusual for Qantas to do so.
But Qantas has previously been on the receiving end of heat from shareholders over highly paid executives.
Joyce’s predecessor, Geoff Dixon, received a $12 million package for the 2008 financial year, which was almost double what he earned the year before.
At the Qantas annual meeting that year, shareholders cast millions of votes against the remuneration report in response to the salaries received by the executives, with media at the time reporting there was a protest vote of roughly 40 per cent.
Under the Corporations Act, Qantas is required to put to a shareholder vote a resolution that the Remuneration Report be adopted. The vote, however, is non-binding, meaning Qantas and the board do not have to act on the outcome of the shareholder vote.
However, the board “takes the outcome of the vote into consideration in determining remuneration policy going forward”, according to an explanatory note at the end of the company’s 2022 annual report.
When will we know Joyce’s final payout?
We will have an indication sometime this month, when Qantas releases its annual report.
Last month, Qantas told the ABC that Joyce’s remuneration package as outgoing CEO will be outlined in that report, as it has done in previous years.
The ABC understands the annual report was finalised last Friday and was ready for publication, but was pulled in response to the recent scandal.
The absolute latest Qantas can tell its shareholders (and the public) what is happening with Joyce’s payout is 28 days before its AGM in early November.
One possible scenario is that a small amount of detail about the Remuneration Report will be disclosed by the airline when it releases its annual report later this month, and may provide further detail 28 days before the AGM.
In short, we can expect to hear just what that final amount paid to Joyce will be by November at the Qantas AGM.
Until then, there are plenty of questions circling around Qantas about recent events – and what happens with Joyce’s payout is just one they will have to find an answer for in the coming weeks.
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