Qantas Airways Ltd (ASX: QAN) Chief Executive Officer Vanessa Hudson's pay will be directly linked to what average punters think of the airline, potentially putting millions in share-based rewards at risk if its reputation doesn't improve.
The company's notice of its annual general meeting, lodged with the ASX this week, sets out the amount Ms Hudson will be paid based on the airline's performance against other S&P/ASX 100 Index (ASX: XTO) companies and global airlines such as Air New Zealand Ltd (ASX: AIZ) and Singapore Airlines.
But going forward, up to 20% of the total number of share rights issued to Ms Hudson "may vest based on Qantas' reputation performance".
It's no secret that Qantas' reputation has suffered in recent years. Some of its actions under previous boss Alan Joyce put it at odds with both the travelling public and its own employees.
The company was found to have illegally sacked 1700 ground crew during the COVID-19 pandemic and apologised to its staff in late 2023.
The eye-watering pay-packets Mr Joyce earned during his tenure, while staff were being sacked and travellers were dealing with plummeting levels of customer service, also caused ire.
Image source: Getty Images
Qantas seeks to rebuild reputation
The company seems determined to set that straight now though, acknowledging in its notice of meeting that its reputation hasn't been at an acceptable standard in recent years.
Historically, Qantas has enjoyed a track record of monthly calculated reputation scores in the Strong (70–79) to Excellent (80+) range; however, during FY23, the group experienced a fall in our reputation scores associated with significant reputational and customer service issues. While the group has made progress in the period since, the Group currently remains in the Average range (60–69) at the end of FY25.
From now until the end of FY28, if the airline's reputation, as measured externally by The RepTrak Company, is less than "strong", Ms Hudson won't receive any of the 20% of share awards covered by this part of her remuneration plan.
Ms Hudson can earn those shares based on a sliding scale above the strong level of 70, and will earn 100% of her shares if people think the airline's reputation is excellent.
From an executive reward perspective, the group wants to achieve a sustained improvement in our reputation scores. As a result, the performance targets are set such that vesting will only occur if the group returns into a reputation range assessed as strong to excellent by the end of the performance period. The assessment will seek to ensure that performance improvement is sustained, and not achieved as a one-off, by considering both monthly and rolling annual performance.
Ms Hudson's fixed based pay increased from $1.648 million to $1.7 million on July 1; however, she can earn another 160% of this amount in short-term incentives and another 160% in long-term incentives each year.
