Australia’s Qantas braces for shareholder showdown
4:07 pm Thursday, November 02nd, 2023
By Byron Kaye
SYDNEY (Reuters) – After being roughed up by judges, lawmakers, regulators and its own employees, Australia’s Qantas Airways faces its toughest grilling at its annual meeting on Friday as investors take the airline to task over a series of crises.
The weight of public fury will most likely overshadow a record annual profit for the carrier in 2023 as shareholders respond to reputational blunders by voting against executive pay and other motions.
If 25% of shareholders vote against an Australian company’s remuneration report, it is rejected. That has no immediate consequences but if is rejected again the following year, shareholders can hold another vote on whether to sack the board.
“This year has seen a spectacular return to profit, but it is likely to be short lived,” said retail investor group the Australian Shareholders’ Association (ASA), citing numerous cost headwinds.
“The governance failures have been staggering in their breadth and depth,” added the ASA, which is recommending that members vote against six of eight motions, including the remuneration report.
Qantas, which sells two-thirds of all Australian domestic airfares, went from one of the country’s most respected brands to a figurehead of pandemic-era frustration when it laid off thousands of ground staff in 2020, replacing them with contractors while collecting government stimulus payments.
The sackings were illegal, the High Court ruled in 2023. Qantas has not yet learned how much it must pay in penalties and reimbursements for the workers.
When the border reopened in 2022, the airline sold tickets to thousands of flights after they were cancelled, said the Australian Competition and Consumer Commission (ACCC) in a 2023 lawsuit, which Qantas is defending.
The airline was accused in Senate hearings of lobbying the Australian government, successfully, to stop rival Qatar Airways from increasing flights to Australia. The ACCC has said the competition would have put downward pressure on international fares, which are 50% above 2019 levels.
Amid the drama, Qantas CEO Alan Joyce brought forward his retirement and the airline’s chairman quit, effective 2024. Joyce’s bonuses are still up for discussion at the meeting since the company withheld some of his bonuses pending the unresolved lawsuits.
Qantas’ bonus system was “misaligned with shareholder outcomes given the recent shareholder value destruction as a result of the controversies at the company”, said proxy adviser Institutional Shareholder Services, which recommends clients vote against the remuneration report.
“The remuneration structure was poorly aligned with customer outcomes and other stakeholders which has contributed to Qantas’ damaged reputation,” said Glass Lewis, another proxy adviser recommending a “no” vote.
(Reporting by Byron Kaye. Editing by Gerry Doyle)
