Qantas huge top dogs payouts!

A report by Fairfax says that payouts totalling $91 million payout, including $8 million for CEO Geoff Dixon, will be made to Qantas senior executives on their last day of employment with the current Qantas if APA’s takeover deal goes ahead, with the payment being made, even if they when they have not met all the performance criteria normally demanded.

The payouts are additional to the cash and share incentives they will receive from the potential new owners of Qantas, including apparently, bonuses of up to 200% of their cash salaries, a stake in the new company of up to 4.5%, and a performance fee for Mr Dixon as high as $60 million, which is believed he is placing in a foundation to give to charity.

This scenario placed the Executive sin the very enviable position of a golden handshake on their way of one company and another on the way into the new one and they will be doing the same job!

The same executives must be getting nervous at the growing opposition to the buy out going ahead with TravelMole subscribers when asked in a Mole Poll, “Are you comfortable in general with the sale of Qantas at this moment in time,” 80% of respondents saying, no they were not!

In addition, in another to a recent Mole Poll asking TravelMole subscribers, “Do you think Tiger Airways’ entry into Australia will significantly change domestic aviation”, 83% saying yes it would.

In addition to the growing uncertainty about the deal among federal parliamentarians financial analysts and managers are also becoming nervous, with the success of the takeover having been thrown into doubt by 6% Qantas shareholders UBS Asset Management and Balanced Equity Management questioning the valuation of $5.60 a share and potentially reluctant fund managers blocking the bid.

Should the bid succeed though the bonus deal represents a new benchmark for takeover executive payout with Mr Dixon and the CFO Peter Gregg, who will receive about $5 million, will be among the biggest beneficiaries.

Of course and not surprisingly, the story is very different on the other side of the working fence with union expressing extreme concern about the future of Qantas workers, who do not qualify for any takeover payments.

Wouldn’t it be nice if Mr Dixon and his colleagues’ largesse extended to dividing their old Qantas departure bonsuses between what they describe as their valued staff, but it appears that their actions demonstrate a rather different view!

Phil Spathis, Executive Director of the Australian Council of Superannuation Investors, a very influential investor body said, “We don’t see that there’s any reasonable justification for full vesting a full payout when either the time or the performance hurdles have not been fully addressed.”

With Qantas’ largest shareholder at the time of the offer, the US-based Capital Group, selling down its stake from 12.9% to 5.5% rather than accept the higher bid price, Bruce Low, a fund manager from ABN Amro Asset Management said, “It’s probably fair to say that there’s some degree of uncertainty that it will go through, adding, “It was feasible public pressure could derail the deal, citing the Government’s shock decision last year to scuttle the $3 billion privatisation of Snowy Hydro.”

Report by The Mole from material obtained from Fairfax