It’s worth noting that pre-pandemic in the 2019 annual report,Qantas’ STIP was weighted 50 per cent towards profits,15 per cent each to customer and safety,and 10 per cent each to domestic market position,and growth or transformation.
The Qantas scandals forced Alan Joyce to retire early,and have hit the airline’s reputation. Now there is pressure on Qantas chairRichard Goyder to follow Joyce out the door. Goyder,so far,has shown no sign of leaving.
He won’t be the only board director under pressure. New appointees,Doug Parker and Heather Smith,will also feel the heat as neither own Qantas shares,based on ASX filings as of Thursday evening.
Smith,a former federal government Industry,Innovation and Science department secretary,was appointed a Qantas director in August. Parker,a former American Airlines chief executive and chairman,was appointed in May.
Parker could fund the purchase of a few Qantas shares by selling some of his $US36 million ($56 million) in American Airlines stock.
The importance of directors owning shares in companies on which they serve was explained in a recent report by Ownership Matters,a group that provides advice and research to institutional investors on companies and boards. “Investors broadly support the concept of non-executive directors having some ‘skin in the game’ through personal investments in ordinary shares,which provide alignment with shareholders,” said Ownership Matters.
If neither Parker nor Smith own shares by Qantas’ annual general meeting in November,it will be a point of contention with shareholders.
At that meeting,the board might also be questioned about its charter. The first item on that charter is that the Qantas board is responsible for having an appropriate corporate governance structure,which creates and protects shareholder value.
Next,is that the board is responsible for ensuring management recognises their legal and other obligations to all stakeholders. Third,is the board’s obligation to ensure it has appropriate accountability and control systems in place.
The charter provides in detail the board’s responsibilities and duties. Among those are “satisfying itself an appropriate risk management framework exists in relation to financial and non-financial risks and to review,monitor and manage risk”.
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In June,Qantas announced new senior management appointments,including the creation of a chief risk officer role. Qantas called it a “new” role. A Qantas spokesman said previously the risk responsibility was shared between John Gissing,the QantasLink chief executive,and the airline’s general counsel.
However,the chief risk officer is not a “new” role but rather back to the future for the airline. The chief risk officer role existed at Qantas in 2011,and was filled by Rob Kella,who is now at Emirates.
By 2012,there was no mention of the chief risk officer role in Qantas’ annual report,despite the position being explicitly mentioned in such reports in multiple prior years.
The 2012 report also had these prescient comments from then chief Alan Joyce:“Financial sustainability is our core goal – building a strong,viable business capable of delivering superior returns for shareholders over the long term. But we cannot achieve this unless we maintain strong governance frameworks,ensure that Qantas is a good place to work for employees and provide world-class service to customers.”
Getting Twiggy with it
Much has been written about the revolving door of senior management at Fortescue Metals Group (FMG) and its green energy subsidiary Fortescue Future Industries. There has been less written about the request made of some departing staff,whether a CEO or a scientist,to sign non-disclosure agreements (NDA).
FMG chief executive Fiona Hick and chief financial officer Christine Morris resigned from the company last month. In a statement,FMG thanked Hick for her “valuable efforts”. In the days that followed,FMG’s executive chairman,Andrew “Twiggy” Forrest,made comments about both women.
He attributedHick’s departure to differences of opinion over FMG’s green transition,and suggested that staff who left the iron ore miner had struggled to cope with Fortescue’s “boiler room” working environment. Regarding Morris,Forrest said she was “very lucky” to have been appointed CFO,and had “just scraped in over an internal candidate – which was an error”. After their departure,Forrest also said FMG now had a “team of insiders,not outsiders”.
The comments were condemned by other business people as disrespectful. Forrest then said Hick and Morris had his best wishes. “They were good people,but we need constant alignment of interest,” he said.
If Hick and Morris were asked to sign NDAs on their exit,then typically such agreements include confidentiality and non-disparagement clauses. That is,after leaving you can’t say anything about the terms of departure or settlement,the reasons for departure,what went on inside the company,its financials,or anything bad about the company or its people,including board and management.
If there were NDAs,should they not also bind FMG,and its founder and executive chair on what he says? Typically,with NDAs the obligations in the contract should mirror one another for each party.
The Australian Council of Superannuation Investors,which represents the nation’s biggest superannuation funds that hold substantial shareholdings in publicly listed companies,has been asking boards if their companies use NDAs,and if so to make available publicly how many NDAs they have instituted on an annual basis.