Up, up and away

How darn crummy it would have been for those Qantas passengers stranded across the country or across the world. As aircraft take to the skies again, it leaves us wondering about the long-term impact the controversial decision to ground its fleet will have on Qantas. In the short-term CEO Alan Joyce’s extreme approach paid off. Fair Work Australia ruled to terminate the industrial disputes that caused mayhem over the past weeks. The irony is that all this follows hot on the heels of the Qantas AGM, where Alan Joyce feathered his already luxurious nest with a 71 percent increase in total pay – to a cool $5 million. And he’s not alone – the whole management team was awarded pay rises. Rather predictably Qantas has justified Joyce’s pay hike by deeming it “not excessive” in comparison to the salaries of other big boys in town.

These pay increases are against the backdrop of airline plans to cut 1,000 jobs and employees scrabbling for a cost of living increase. The share price has fallen 16 percent over the past year, and no dividends declared for over 2 years. It’s no wonder there is some shareholder objection to the pay increases. Dissenting (mostly retail) shareholders were very vocal at the AGM – hissing and booing and walking out of the meeting. But their votes amounted to just 2.79%. It seems the boys club is thriving as institutional shareholders and proxy advisers ensured the Qantas remuneration report sailed through with a 96% vote in favour. We know Qantas isn’t the only one paying out of the realms of reasonableness in terms of executive remuneration.

Do you ever wonder what those highly paid CEO’s do with their money? I mean how on earth do you allocate each and every day what the average person earns in a month, or a year? Obviously the cash just keeps accumulating onto their ever-expanding mountain of investments, assets and toys. This leads to another question - Why? Why do the corporate leaders of this country, and globally, keep justifying huge annual increases, while those at the bottom of the pile are struggling to keep up with the cost of living? How much can someone possibly need?

Methinks a big part of it is Keeping-Up-With-The-Joneses, on steroids! The remuneration disclosure requirements, meant to keep people honest, have delivered the opposite result. Those enormous executive egos now know exactly what their competitor counterparts are pocketing and feel a need to see them and raise it a hundred thou (or several). Moreover their pay doesn’t seem to have any link to delivery. Hurdles too onerous? Just lower them. Share price at an all time low? Give the management team a raise. Booted due to non-performance? Take a couple of mil to soften the blow to self-esteem.

Our blog last week referred to the Occupy Wall Street protests and in part they are objecting to this sort of disparity in society, where the bigwigs get it all while the battlers who make a real difference get precious little. Let’s get back to basics. Put egos aside and remember that more money does not equal more happiness. It would be refreshing indeed to try a new paradigm, where compensation (financial and non-financial) is truly proportionate to performance. A true meritocracy, one where creativity, endeavour and excellence are rewarded. One where there is blue sky for everyone.