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When Alan Joyce left Qantas last year after more than two decades with the airline, he was granted a generous remuneration package worth millions.
The payout included long-term bonuses and shares in the carrier because the former airline boss had satisfied his performance criteria by reaching measurable goals.
But even then, Mr Joyce was caught up in a swirl of questions over whether he was entitled to all of it, including a more than $23 million "golden handshake" retirement package.
Perhaps in recognition of this, part of Mr Joyce's renumeration package — an estimated $14.4 million — was at risk of being clawed back by the airline's board.
Now, Qantas says he will be docked almost $10 million of that overall payout after the airline lost its High Court battle over the illegal sacking of ground staff in 2020 and a recent settlement with the Australian Competition and Consumer Commission (ACCC) about flight cancellations.
But he's still walking away with more than $12 million for his time at the airline in the 2023 financial year.
Here's what you need to know about what's been cut from his pay package, and the critical findings made in an independent review.
What was Alan Joyce supposed to be paid?
This all centres around Mr Joyce's full payout during his final year as Qantas' chief executive.
In the 2022-23 financial year, he received a total remuneration package of $23.6 million, but it wasn't all paid in cash.
That year, he received a base pay in cash of $2,145,000 (including $25,292 in superannuation contributions). His base pay was the same as the previous financial year.
In addition to a base salary, Mr Joyce was also entitled to receive bonuses and Qantas shares, relative to how the company had performed over a period of time.
Once awarded, Mr Joyce would be allowed to trade those Qantas shares on the Australian Securities Exchange (ASX) — including selling them.
In June last year, Mr Joyce sold most of his $17 million worth of Qantas shares with the approval of the airline's board. He was widely scrutinised for doing so at the time, when he knew that the ACCC was investigating the company over its pandemic-era flight credits debacle.
(We'll get into more detail about how those shares and bonuses work in a moment.)
When those additional shares and bonuses were factored in, Mr Joyce's total remuneration for the 2023 financial year came in at $23.6 million, however, $14.4 million of it was subject to a "clawback" by the Qantas board.
The reason for that clawback was tied to the turbulence and ongoing scrutiny the airline had faced — including the sacking of hundreds of ground staff at the start of the 2020 pandemic, and legal action brought by the ACCC for allegedly selling tickets to "ghost flights".
The board ultimately decided that until those matters had resolved, it would not pay out any of that $14.4 million, which was comprised of cash and Qantas shares.
That brings us to Thursday, and the Qantas board's decision not to pay a large chunk of his generous remuneration package.
How much has his pay been reduced?
The main figure you'll see bandied about is $9.26 million — but as we've foreshadowed, it isn't cold hard cash that he's had to forfeit.
Mr Joyce's entire salary package is comprised of a few different parts: a base salary, a short-term incentive plan (STIPs), a long-term incentive plan (LTIPs) and other one-off bonuses.
Those "incentives" are corporate speak for rights to Qantas shares, and are assigned a dollar value based on its current share price on the ASX.
In other words, they are effectively a reward for Qantas executives based on the company's longer-term performance outcomes.
Should those performance outcomes be met over a three-year period, those long-term incentives are converted to Qantas shares (also known as "vesting") but they are unable to be traded for another year and are subject to being clawed back.
In its 2023 annual report, Qantas confirmed those performance objectives had been met, and therefore 100 per cent of the rights to Qantas shares awarded between 2021 and 2023 would vest and convert to shares.
However, on Thursday, Qantas confirmed that those shares would not vest — stripping $8.36 million from Mr Joyce's total remuneration.
An additional $900,000 has also been deducted from his short-term incentive payment, meaning $9.26 million has been cut from his final payout.
To get an idea of what that looks like, here's a visual representation:
However, given Mr Joyce spent two months with the airline before departing on September 6 last year, he is expected to still be paid for those 67 days.
Full details on that won't be known until Qantas releases its annual report later this year.
Given all of this, Mr Joyce has still walked away with roughly $14 million from his final year at Qantas, and is estimated to have received $125 million during his 22 years at the airline, with most of those as CEO.
Does Mr Joyce still get a bonus?
The short answer is yes. While Qantas is a publicly listed company, shareholders don't get a say in awarding bonuses and the decision is at the discretion of the Qantas board.
As chief executive, Mr Joyce was entitled to receive a base salary on top of annual bonuses issued as Qantas shares, depending on his (and the airline's) performance.
He was given the remuneration package in 2023 because he satisfied the board's own performance criteria by reaching measurable goals, but part of the full amount was subject to conditions as outlined earlier.
Transport Workers Union national secretary Michael Kaine said "it's right" that Qantas intervened to cut the $9.3 million worth of bonuses.
"But make no mistake, if that intervention hadn't been made, the settings that Joyce put in place with a compliant board would have allowed him to walk away with another $9.3 million.
"The settings he put in place allowed him to dump his shares to maximise profit just before the share price fell.
"This is a company that seems to be eager to turn into a new chapter but hasn't yet turned into a new chapter."
Analyst and fund manager Roger Montgomery also noted the reputational headwinds facing Qantas before and after Mr Joyce's departure, including the recent High Court decision that found the airline illegally sacked ground staff in 2020.
"That alone is enough for a review of a salary of any CEO of a company that has been found to act in a way that's inconsistent with a company that wants to maintain its brand reputation," Mr Montgomery told the World Today.
Qantas was not legally required to reinstate the workers it illegally sacked, but it does need to find a way to compensate them.
The bill is yet to be finalised, with lawyers noting at the time that working out the final amount would be challenging to calculate.
On Thursday, Qantas' statement to the ASX said, "there were no findings of deliberate wrongdoing" and that "mistakes were made by the board and management".
That "doesn't make sense" to Mr Montgomery, who said "it's certainly a question for the company to answer."
When Qantas was approached for clarification on this matter, a spokesperson referred the ABC to the independent advisor behind the airline's corporate governance report, Tom Saar.
What did the governance report say about Qantas?
The 19-page governance report carefully toed the line between criticism and politeness, but it painted a picture of a company that has a toxic leadership culture.
Mr Saar described Qantas as having a "command and control" leadership style "with a dominant and trusted CEO, leading to insufficient listening and low speak up".
"This contributed to a top-down culture, which impacted empowerment and a willingness to challenge or 'speak up' on issues or decisions of concern except in relation to safety matters," he wrote.
"In turn, that cultural characteristic underpinned some of the events that affected [Qantas'] reputation."
Mr Saar's report also critiqued Qantas' managerial decisions during the COVID-19 pandemic, stating that its leadership culture "contributed at times to a focus on financial performance before stakeholders and non-financial risks", other than safety.
Outgoing Qantas chair Richard Goyder and chairman-elect John Mullen "have committed to implementing actions to address", with the support of Qantas' management.
The report concludes with Qantas' board stating that it takes "full accountability for the events which damaged the trust" placed in the airline, and is working to implement the recommendations made in the review.
"We are committed to the changes to structures, policies, practices, behaviours and people that we are implementing to recover and sustain our high-quality reputation with all of our stakeholders," the company wrote.
"Many of the actions are already in place and making a difference and the rest are underway.
"However, we won't stop here and are committed to continuous improvement to rebuild the trust of our stakeholders and restoring pride in Qantas as the national carrier."
What does this mean for consumers?
The cut to Mr Joyce's remuneration package will mean very little to everyday Qantas customers.
But the findings of the governance report could have ramifications inside the company and for shareholders, given the criticism of the culture.
Following Thursday's announcement, the airline's share price dropped 2.2 per cent to $5.84.
It's a drop in the ocean compared to the 15 per cent plummet Qantas experienced in September last year, but it's still a reflection of some investor unease.
At its annual general meeting (AGM) last November, Qantas shareholders expressed their frustration in a significant protest vote against the board's plan to compensate its executives.
Given recent developments, all eyes will be on the AGM later this year to see if investors once again register their disapproval.
A second strike could see a spillover of the board, a shake up that would likely have much broader consequences for the company and its consumers.
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