Aug
8 (Reuters) - Australia's Qantas (QAN.AX)
said it was cutting its former CEO's exit bonuses by A$9.3 million ($6
million) after an external review found him responsible for measures
alienating travellers, employees and shareholders in the COVID era and
beyond.
The
decision marks a gloomy footnote to the 15-year rein of Alan Joyce at
Australia's dominant airline, who brought forward his retirement to last
September under a cloud of lawsuits alleging unfair pandemic sackings and
selling tickets to cancelled flights.
Qantas
was one of Australia's top brands for years even as Joyce leaned into
controversy. In 2011, he grounded its entire fleet over a union dispute,
but the sacking of 1,700 groundstaff in 2020 while collecting COVID
stimulus payments, followed by a surge of flight cancellations and lost
luggage once COVID border restrictions lifted, prompted analysts to warn
the cost of repairing the airline's reputation may hurt profit.
Joyce's
final compensation totalled A$21.4 million including bonuses, but the
company said at the time it reserved the right to withhold some pending an
external review of how the airline which sells nearly two-thirds of
Australian domestic fares was run.
Qantas
published the review on Thursday, which blamed the company's reputational
crisis on a "command and control" leadership style, and said it was
cutting Joyce's final package to just over half the original amount.
"There
was too much deference to a long-tenured CEO who had endured and overcome
multiple past operational and financial crises," said the report by
McKinsey & Co senior adviser Tom Saar.
"(Qantas)
had a 'command and control' leadership style with centralised decisions
and an experienced and dominant CEO," the report added.
"This
contributed to a top-down culture, which impacted empowerment and a
willingness to challenge ... decisions of concern. That cultural
characteristic underpinned some of the events that affected the group's
reputation."
The
Qantas board had "limited visibility or appreciation of the manifestation
of this cultural characteristic", the report noted, adding that the
company had already replaced some directors and top managers.
The
company was also re-setting its relationships with external stakeholders,
the report said, in light of an "adversarial approach to engagement" under
Joyce.
And
the airline had brought in a stricter internal approval process for CEO
share sales, the report said, noting Joyce's sale of A$17 million of
Qantas shares in June 2023, a few months before his scheduled retirement,
contributed to a loss of trust among stakeholders.
Qantas
agreed in May to pay A$120 million to settle a regulator lawsuit over the
sale of thousands of tickets on already cancelled flights.
The
airline, which reports full-year results on Aug. 29, is still waiting to
learn how much it must pay after losing a separate lawsuit which found it
illegally fired 1,700 ground staff in 2020 to stop them from taking
industrial action like strikes.
($1
= 1.5349 Australian dollars)
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Reporting by Byron Kaye in Sydney and Rishav Chatterjee in Bengaluru; Editing by Anil D'Silva, Sherry Jacob-Phillips and Michael Perry
