Dixon faces backlash over pay
* Matt O'Sullivan
* November 28, 2008
QANTAS'S knockabout boss, Geoff Dixon, will mark his last day on a sour note today, facing a backlash over his "excessive" salary that has made him the world's highest-paid airline executive.
Just days after announcing a profit downgrade, an analysis has revealed that Mr Dixon and his senior executive team stood to hang on to big cash payments even when the airline's performance deteriorated.
The influential governance adviser RiskMetrics has advised clients - some of whom are Qantas's largest shareholders - to vote against the executive pay deal at the annual meeting in Brisbane today.
RiskMetrics' analysis shows Mr Dixon's cash-based pay was 580 per cent higher than that for Gerald Arpey, the chief executive of the world's largest commercial carrier, American Airlines.
The adviser said Mr Dixon's pay was excessive compared with those of chief executives at similar-sized companies.
Not only was his fixed salary of $2.3 million "significantly higher" than that of his peers, but his cash-based pay of $5.3 million was much greater than that for chiefs of competitor airlines.
"While Dixon is in cash terms the highest-paid aviation executive in the world, Qantas revenues … are lower than six of the 11 other airlines considered," RiskMetrics' report said. Qantas's largesse towards senior executives will be galling for staff who for years have been told to tighten their belts to improve the airline's competitiveness. The airline is laying off 1500 staff by Christmas and has tried to cap staff wage rises at 3 per cent a year.
RiskMetrics' director, Dean Paatsch, said Qantas executives would not experience the same pain as shareholders in the "event of an unexpected loss of altitude" because so much of their pay was in cash.
"We would like to see a better alignment [with shareholder returns] by ensuring some of the short-term bonuses are deferred into company stock," he said.
The adviser said shareholders might question the board over Mr Dixon's salary because Qantas's total returns since June 2002 had been less than that of the world airline index.
The airline's returns had also been "substantially lower" than the performance of Australia's top 100 companies.
"The improved profitability performance by Qantas can … be largely attributed to market conditions, rather than any extraordinary management skill exhibited by the CEO," it said.
"Rewarding executives by way of large cash payments allows senior executives to benefit during peak times in the industry and insulates their remuneration from any subsequent depreciation in the company's performance."
RiskMetrics has urged a vote against the election of a director, Barbara Ward, who was appointed in June, because of her links to Allco Finance Group and Multiplex.
Mr Dixon's total package for the year to June was $11.92 million, up from $6.5 million a year earlier. Three months before the $11.1 billion private equity raid on Qantas was made public in November 2006, Mr Dixon had close to $8 million tipped into his superannuation account when he renewed his contract.
Qantas declined to comment yesterday