Qantas shareholders meet next week in faraway Perth and already Riskmetrics is taking aim at the proposal to compensate former CEO Geoff Dixon for tax changes on superannuation back in 2006, even though he ended up avoiding any penalty from those changes.
But there are other queries for the board that will not be able to be made because the meeting is in Perth and for most of the company’s owners, travelling west is too expensive and too time-consuming.
The company is holding it in Perth because of a policy, introduced by former chairman Gary Pemberton to take the meeting to shareholders in cities apart from Sydney and Melbourne. That’s fine, but when the overwhelming majority of shareholders are in NSW and Victoria, the two biggest states, and especially in Sydney and Melbourne, the move is discriminatory.
That is especially so this year because of the controversial nature of the $10.7 million payment to Dixon, even though he only worked five months. That figure included the $3 million payment to Dixon to compensate him for a tax change that didn’t penalise him.
Dixon had been treated “nicely” by the Qantas board, led by his friend, chairman Margaret Jackson; the board failed to penalise him for his disloyalty in supporting (indeed driving) the failed private equity buyout from Macquarie Bank and its mates in 2007. That support for Dixon was probably based on guilt as much as anything because Jackson was also a supporter. But led by Dixon and CFO Peter Gregg, management was the cheer squad for the terrible idea.
Since then the Qantas share price has been driven down by the credit crunch, recession and the airline’s loss of reputation over reliability and safety concerns that occurred while Dixon was CEO.
He fought with unions over safety and staffing, Qantas developed a reputation for ignoring staff, passenger and regulator concerns. Dixon was paid millions of dollars while this was happening, and the board now has this ridiculous payment of $3 million for something that didn’t happen.
Shareholders would not object to the way Jetstar has been set up and has taken business from the main airline because Jetstar was the difference between a small profit and a large loss in 2009. But Jetstar has had reliability problems and a high handed and hard-line approach to customers/passengers and has become a magnet for bad news in these areas. That happened under Joyce.
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Shareholders have seen their dividends fall, with the final payment for 2009 omitted and no assurance when they will return.
Joyce’s pay fell from more than $5 million in 2008 to just over $3 million in 2009. But some shareholders would like to know if he and the rest of management, plus the board will freeze their salaries or even reduce them by the same amount as the income to the owners (i.e. shareholders) has been reduced.
And, finally, I bet not one board member, including chairman Lee Clifford, will answer a question as to why the board and Dixon did not know of the freight price-fixing deals that have seen the airline fined and at least one former US executive jailed in America.
That attempt at price fixing happened during Dixon’s term as CEO and neither he nor other senior executives knew anything about it. That is poor management.
Surely that ignorance should have formed a part of assessing the level of bonuses and other payments to senior executives, including Dixon. It was a fundamental breach of trust and law.
Looking at these questions, it is easy to see why Qantas is meeting in Perth.