By Byron Kaye and Rishav Chatterjee
(Reuters) -Australia's Qantas said it was cutting its former CEO's exit bonuses by A$9.3 million ($6 million) after an external review found him responsible for measures alienating travellers, employees and shareholders in the COVID era and beyond.
The decision marks a gloomy footnote to the 15-year rein of Alan Joyce at Australia's dominant airline, who brought forward his retirement to last September under a cloud of lawsuits alleging unfair pandemic sackings and selling tickets to cancelled flights.
Qantas was one of Australia's top brands for years even as Joyce leaned into controversy. In 2011, he grounded its entire fleet over a union dispute, but the sacking of 1,700 groundstaff in 2020 while collecting COVID stimulus payments, followed by a surge of flight cancellations and lost luggage once COVID border restrictions lifted, prompted analysts to warn the cost of repairing the airline's reputation may hurt profit.
Joyce's final compensation totalled A$21.4 million including bonuses, but the company said at the time it reserved the right to withhold some pending an external review of how the airline which sells nearly two-thirds of Australian domestic fares was run.
Qantas published the review on Thursday, which blamed the company's reputational crisis on a "command and control" leadership style, and said it was cutting Joyce's final package to just over half the original amount.
"There was too much deference to a long-tenured CEO who had endured and overcome multiple past operational and financial crises," said the report by McKinsey & Co senior adviser Tom Saar.
"(Qantas) had a 'command and control' leadership style with centralised decisions and an experienced and dominant CEO," the report added.
"This contributed to a top-down culture, which impacted empowerment and a willingness to challenge ... decisions of concern. That cultural characteristic underpinned some of the events that affected the group's reputation."
The Qantas board had "limited visibility or appreciation of the manifestation of this cultural characteristic", the report noted, adding that the company had already replaced some directors and top managers.
The company was also re-setting its relationships with external stakeholders, the report said, in light of an "adversarial approach to engagement" under Joyce.
And the airline had brought in a stricter internal approval process for CEO share sales, the report said, noting Joyce's sale of A$17 million of Qantas shares in June 2023, a few months before his scheduled retirement, contributed to a loss of trust among stakeholders.
Qantas agreed in May to pay A$120 million to settle a regulator lawsuit over the sale of thousands of tickets on already cancelled flights.
The airline, which reports full-year results on Aug. 29, is still waiting to learn how much it must pay after losing a separate lawsuit which found it illegally fired 1,700 ground staff in 2020 to stop them from taking industrial action like strikes.
($1 = 1.5349 Australian dollars)
(Reporting by Byron Kaye in Sydney and Rishav Chatterjee in Bengaluru; Editing by Anil D'Silva, Sherry Jacob-Phillips and Michael Perry)
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