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Qantas board withholds CEO’s bonuses amidst ACCC investigation

The Qantas (ASX:QAN) board paid former CEO Alan Joyce $21.4 million as he exited the company, according to the airline’s annual report released Wednesday afternoon. However, the board said it would withhold short-term bonuses until the Australian Competition and Consumer Commission (ACCC) investigation into the airline’s alleged sale of airfares for flights already canceled concludes. This means Qantas has withheld up to $14.4 million in short-term bonuses for Joyce until more details are provided about the nature of the investigation by the Commission.

Joyce was paid $11.9 million on a statutory basis for 2023. In the annual report, Chairman Richard Goyder said he recognized that customers had lost trust in the airline business.

“Much of the loss of trust stems from allegations by the ACCC. We recognize the important role of the ACCC, and the company has cooperated fully with its investigations, which only crystallized into material allegations when legal action was announced on 31 August this year. These allegations are concerning and have the board’s full attention,” Goyder said.

“As we move through our recovery, management and the Board are acutely aware of the need to rebuild your confidence in Qantas. We’re also conscious of the loss of trust that has occurred because our service has often fallen short of expectations, compounded by a number of other issues relating to the pandemic period.

“In recognition of the customer and brand impact of cumulative events, the Board has applied its discretion to reduce short-term incentives for senior executives in FY23.”

The news will not assuage upset shareholders ahead of the airline’s 2022-23 annual meeting in Melbourne on November 3. Qantas shares lost 2.2% by Wednesday’s close, ending at $5.33.

The annual report was released hours after a Federal Court judge ordered Qantas to attend a month of mediation talks with the Transport Workers Union over the illegal sacking of nearly 1700 ground staff in late 2020.

Federal Court Justice Michael Lee on Wednesday ordered the airline and the union to move into mediation from next week under the guidance of the court’s former chief justice, James Allsop, in the hope of settling what could be the largest compensation orders issued under the Fair Work Act’s adverse action laws.

Qantas faces potential penalties and compensation of an estimated $200 million.

“There’s [1700] people whose lives have been affected, together with their families, and I wish to ensure that this matter is resolved as soon as I can,” Justice Lee was reported as telling the parties in the Federal Court on Wednesday.

He said new Qantas CEO, Vanessa Hudson, had to be directly involved in the talks, and when counsel for Qantas tried to get her excused, media reports said Justice Lee pressed the airline over her direct involvement.

“I want the chief executive officer to be present, together with the person leading the union to be there,” Lee said. “That, in my view, like the many mediations that I’ve been involved in over many, many years, is appropriate in escalating it to an appropriate level to maximize the prospects of settlement.”

The Federal Court order follows the airline’s loss on appeal in the High Court a week ago when it tried (for a third time) to get a court ruling supporting its late 2020 sacking and move to outsource the jobs to a number of third-party companies.

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