On the raw numbers, shareholders of Qantas Airways Limited (ASX: QAN) should be a happy lot. Qantas shares are up a healthy 13.3% over 2022 thus far. That's a gain that far outstrips the S&P/ASX 200 Index (ASX: XJO)'s loss of 10%.
Sure, Qantas shares aren't back to their pre-COVID levels of more than $7 a share. But all could agree that it has been a tough time for the airline in recent years. And Qantas did hit a new post-COVID high earlier this month.
Over the past 12 months, the Qantas share price is also in the green, having recorded gains close to 6%. Again, that's a lot better than the ASX 200's loss of 7.2% over the same period. And yet, some shareholders don't seem to be happy with the company. Or at least with its CEO, Alan Joyce.
According to reporting in the Australian Financial Review (AFR) today, Qantas' management looks set to face a backlash at the next annual shareholder meeting this Friday.
Qantas shares are having a good year, but AGM could be tense
The report alleges that Joyce and Qantas management could face a possible protest vote against proposed remuneration arrangements for Joyce and the airline's senior management. This is due to one major proxy firm – ISS. ISS is recommending shareholders vote against the company's present executive retention scheme. It is doing so from the belief that the set performance targets were not "sufficiently challenging".
This scheme contains company targets such as cutting $1 billion worth of costs by June 2023 and a return to profitability by the 2023 financial year.
Under the terms, Joyce will be entitled to almost 700,000 Qantas shares, worth around $4 million.
In a report, ISS accused Qantas of giving investors a "false choice" on this vote:
The company intends to make a cash equivalent payment rather than an equity award if shareholder approval is not obtained… The CEO's remuneration is set well above the market median and has been identified as a high concern for misalignment of pay with underlying company performance over the past three years.
Qantas' management has reportedly dismissed these concerns, saying that ISS' arguments "include companies that are far smaller and does not adequately recognise Mr Joyce's experience or previous performance".
However, ISS' concerns are not shared by other proxy groups. Other groups like CGI Glass Lewis and the Australian Council of Superannuation Investors have not recommended stakeholders vote against the scheme.
So it will be interesting to see what happens at the annual general meeting this Friday.
