Geoff Dixon’s admirable donation of his MacQanTexCoe equity upside overshadows a valuable insight into the senior executive bonus culture that has created a debilitating class system in corporate Australia. Dixon’s philanthropy is newsworthy because it is exceptional.

It wasn’t revealed how much of the one per cent economic interest reserved for Qantas senior management is Dixon’s, but his share will reap $30 million if the new Qantas profit averages 15 per cent growth and $60 million if it does 25 per cent.

That of course is on top of the CEO’s existing substantial salary. It’s an indication of the very serious money private equity is happy to wave in front of the top few executives – a level of magnitude above the already generous bonus schemes detailed in the major corporates’ remuneration reports.

The “ordinary” bonus schemes are enough to make for two very distinct classes of employees – the chosen and the dross, or the value adders and the costs. The bonus culture has been blamed for some of the excesses that have occurred down the management line at Woolworths over the years and received a particularly big serve at NAB in the wake of the trading desk scandal.

To crank that up another level via the private equiteers is just a little frightening. The private equity model means the CEO, CFO and another couple of key executives stand to make absolute fortunes – and a large part of the way they do it is by trying to pay everyone else less.

The five-year horizon indicated in the Qantas model points to the eventual danger. After the five years are up, well, long-term sustainability of what’s left isn’t really their problem. There are other fortunes to be made elsewhere.

In the meantime, just how keen will 34,995 of Qantas’ workforce be to cut costs and work ever harder for relatively less money so that the other five will gain the equivalent of several Oz Lotto jackpots?

Peter Fray

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