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Proxy advisors have told shareholders to vote against Qantas’ remuneration plan and the re-election of board member Todd Sampson at the airline’s upcoming annual general meeting, following a horror run for the business.
Glass Lewis and Ownership Matters have told investors they should not support Qantas’ 2023 remuneration report at its meeting in Melbourne on November 3. Australia’s biggest airline business has become embroiled in a series of scandals this year, which have led to the early departure of longstanding chief Alan Joyce and the resignation of chair Richard Goyder.
The Qantas board is under pressure over allegations it deliberately sold flights that had already been cancelled.Credit: Brook Mitchell
Ownership Matters told investors on Monday that Qantas had not appropriately reduced its incentive outcomes despite the recent turmoil and that it was not clear what further information the board needed to tackle the headwinds faced by the airline.
“Most of these challenges have arisen as a result of damage to the Qantas brand from management actions[,] only some of which arose from the challenges of restarting the airline’s operations in the wake of COVID,” read an email seen by this masthead from Ownership Matters to institutional investors.
Ownership Matters has also urged shareholders to vote against the re-election of marketing executive Todd Sampson – who has been on Qantas’ board since 2015 – in the interests of board accountability, given Qantas’ recent fall from grace.
“Sampson has heightened responsibility for this, despite the board’s collective responsibility, given he has been a director for more than eight years and his background in advertising, marketing & brand management,” the email said.
Glass Lewis’ proxy report criticised Qantas’ remuneration plan for being “poorly aligned with its licence to operate” and expressed concerns over its governance. However, it recommended shareholders endorse the re-election of Sampson and long-standing board members Belinda Hutchinson, as well as the appointment of newly minted chief executive Vanessa Hudson to the board.
The proxy advisor also supported the election of former American Airlines boss Doug Parker and former public servant Heather Smith as new directors. If Sampson is not re-elected, Qantas will have just three directors who were appointed before 2023.
A Qantas spokesperson told this masthead that the business is bracing for shareholders to express their discontent at the upcoming meeting. “We know this annual general meeting will be an important opportunity for shareholders to express their disappointment and frustration with past events,” the spokesperson said.
“The board and management are all listening to the concerns of all stakeholders and are focussed on the change underway, including leadership renewal that also provides some level of continuity.”
The spokesperson added the business was in a “fundamentally strong position” to fix service issues and restore trust.
Qantas issued its annual report with details of executive remuneration in September, two weeks later than usual, after its board faced serious pressure to dock the pay of executives despite its record $2.47 billion in underlying profit for the 2023 financial year.
The pressure from investors to claw back the remuneration of executives began in September when the Australian Competition and Consumer Commission (ACCC) announced legal action against the airline, alleging Qantas sold tickets for cancelled flights in 2022.
The board moved to reduce the short-term bonuses of executives by 20 per cent for 2023 and has withheld additional long-term incentives until after more detail is provided about the ACCC allegations. This meant Joyce had his final pay packet docked by $500,000 to $21.4 million, with a further $2.2 million in bonuses up in the air.
Goyder announced last week that he would step down from his role at Qantas ahead of the group’s 2024 annual meeting as part of a broader board overhaul, after weeks of dismissing calls for his resignation over concerns the business has been improperly governed.
The business has also implemented a new three-year limit on the tenure of board directors to provide “a balance of fresh leadership with necessary continuity”.
Non-executive director Michael L’Estrange is set to retire at this year’s annual meeting after seven years on the board. Other Qantas board stalwarts Jaqueline Hey, who chairs its remuneration committee, and Maxine Brenner, a member of Qantas’ remuneration and audit committees, are set to retire in February at the carrier’s half-year results, after a decade on the board.
About 17 per cent of shareholders voted against Brenner’s re-election to Telstra’s board earlier in the week over concerns about her governance of Qantas.
In addition to the much-publicised ACCC action, Glass Lewis and Ownership Matters cited a recent High Court decision that found Qantas breached the Fair Work Act, following its appeal of two Federal Court decisions which determined the airline business illegally sacked 1700 ground handlers through outsourcing their positions in November 2020.
In their reports, the proxy advisors also referenced Joyce’s decision to sell 2.5 million shares at $6.74 per share in June despite the airline business receiving a “detailed demand for information” from the ACCC five weeks earlier as part of its investigation.
Since Joyce’s share sale, Qantas’ share price has plummeted by 25 per cent to $4.86.
Both advisors also highlighted the ongoing scrutiny of Qantas’ role in the federal government’s rejection of Qatar Airways’ application to double its flights to Australia and the potential brand ramifications stemming from perceptions of undue government influence.
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