$2m salary increase for Qantas CEO Dixon

A Sydney Morning Herald report says that the failure of the $11 billion private equity bid for Qantas may have deprived chief executive Geoff Dixon of tens of millions of dollars in longer-term bonuses and share payouts but he has cushioned the blow with a $2 million salary increase, totalling his package at around $7m.

Mr Dixon, who would have held the same job if the Airline Partners Australia offer had succeeded, enjoyed a 60 per cent rise in the cash terms of his contract, according to the Qantas annual report released yesterday.

Almost all the overall increase in Mr Dixon’s salary package of $5.35 million was accounted for by an extra $1.94 million “cash incentive” under the short-term benefit part of his employment with Qantas and that compares to $3.3 million he earned through the same method last year.

Under the terms of his contract, Mr Dixon gets 50 per cent of his total annual remuneration as a fixed payment, 30 per cent as a cash incentive if he meets internally set performance targets and 20 per cent in Qantas shares.

Adding those other elements to his superannuation benefits and travel perks helped to boost his total earnings for the year to June to just over $6.7 million compared with $5.27 million for the previous year.

Mr Dixon also continues to be the most significant shareholder among Qantas’s board of directors, having seen his direct equity stake pass the 1 million shares mark during the year.

That holding is now worth nearly $5.8 million, based on the airline’s closing share price of $5.61 yesterday. It is a significant leap in value on a year ago, when Qantas’s shares were languishing around $3.50 before they soared on the back of APA’s $5.45- a-share offer made last summer.

The stock has consistently outperformed that price since the Macquarie Bank-led consortium’s bid fell over in May. Several major investors rejected the bid on the grounds it undervalued the airline’s long-term prospects.

Mr Dixon’s right-hand man, finance director Peter Gregg, who also would have been an instrumental player in an APA privately owned Qantas, received a more modest increase. His total package rose by just under $500,000 to $4.15 million, although the short-term cash part of his deal was $1.1 million higher. However, the impact of this on his overall deal was offset by what were described as larger post-employment benefits last year.

John Borghetti also earned more than $4m, up from just over $3m, with Gary Hounsell receiving $316,915, including a $50,000 bonus for chairing the Target Statement Committee during the failed takeover bid by Airline Partners Australia.

Jetstar CEO Joyce received $2.7 million, a rise from $1.4 million.

As for the outgoing chairman, Margaret Jackson, who was criticised by investors for being too supportive of the APA bid, her last full-year boardroom payment went up 11 per cent, or nearly $58,000, to $592,685.

She will stand down at the company’s annual meeting in November

This is in a company reportedly slashing costs with the carrier’s Sustainable Future Program creating savings of $753m, including labour savings of $238m.

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Report by The Mole