Executive Performance and Remuneration Report Analysis of Qantas

This report provides a comprehensive analysis of Qantas' remuneration report, focusing on executive performance evaluation and reward systems. It examines the company's approach to incentivizing its executive team and assesses the effectiveness of its remuneration strategies in driving improved company performance. The report delves into the effectiveness of control systems, the types of remuneration offered (intrinsic and extrinsic rewards, cash compensation, deferred compensation, long-term incentive plans, option grants, retirement packages, and executive perks), and the alignment of remuneration with company goals. Findings highlight the effectiveness of Qantas' remuneration system, its focus on a standard pay package, and the complexities associated with executive remuneration in corporate governance. The report concludes with recommendations for improving reporting and enhancing performance measures, offering valuable insights into Qantas' remuneration practices and their impact on business development and overall success. Data from the Qantas annual report 2017 is also used to analyze the remuneration methods used.

Running head: REMUNERATION REPORT ANALYSIS OF QANTAS
Remuneration Report Analysis of Qantas
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1REMUNERATION REPORT ANALYSIS OF QANTAS
Executive Summary
Executive performance evaluation by the board serves as a major aspect of efficient governance.
The report explains the selected company’s approach in encouraging higher performance by its
executive team along with analyzing whether it transformed to better company performance.
Remuneration system of Qantas is deemed to be effective enough in delivering superior
performance for the company as well as its executives. In addition, it has been found out that the
airline has concentrated on paying a standard pay package to its staffs. The report elucidated that
while reporting, Qantas must consider analyzing as the gathered data is not always a real
reflection of real performance in which more than one raw information input is provided to attain
real picture.

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Table of Contents
1. Introduction......................................................................................................................3
2. Topic and Literature Review...........................................................................................3
2.1. Executive Performance Evaluation and Remuneration in Public Companies..........3
2.2. Effectiveness of Control Systems within Companies...............................................4
2.3. Executive Performance and Reward Systems..........................................................5
3. Company Review.............................................................................................................6
4. Findings Summary...........................................................................................................8
5. Analysis of Remuneration Methods Used.......................................................................9
6. Recommendations..........................................................................................................10
7. Conclusion.....................................................................................................................12
References..........................................................................................................................13

3REMUNERATION REPORT ANALYSIS OF QANTAS
1. Introduction
Remuneration report analysis facilitates in increasing the efficiency of a company’s
remuneration practices and policies through explaining the ways in which the employees are
compensated in contrast to reference market (Malak 2015). The objective of the current report is
to develop a summary of the literature researched on a specific topic of executive performance
analysis along with remuneration an Australian public company named Qantas. This report will
facilitate in developing an increased knowledge regarding remuneration report analysis of Qantas
that facilitates a better informed consideration regarding remuneration report of Qantas. The
report will also encompass an elaboration on control systems effectiveness in companies that
basically focuses on executive or management performance along with reward systems. The
report will also elaborate the selected company’s approach in encouraging higher performance
by its executive team along with analyzing whether it transformed to better company
performance. Moreover, certain recommendations will also be provided for reporting
improvement and enhancing performance measures.
2. Topic and Literature Review
2.1. Executive Performance Evaluation and Remuneration in Public Companies
Executive performance evaluation by the board serves as a major aspect of efficient
governance. Adamson, Manson and Zakaria (2014) stated that after surveying 99% of the
directors it is gathered that their performance is analyzed yearly and the rest carries out regular
evaluations. Performance analysis is deemed to be difficult in the executive level. Barontini,
Bozzi and Ferrarini (2017) indicated that a better explained process analyses the past

4REMUNERATION REPORT ANALYSIS OF QANTAS
performance along with developing goals for the future that can assist the compensation
committee of the board in developing decisions concerning future compensation and
employment of the executives. A proper executive performance analysis process explains past
performance along with setting future goals, which supports the remuneration committee of the
board in taking effective decisions regarding future employment and compensation along with
setting proper strategic objectives. Board (2015) indicated that the goal setting factor of the
executive performance analysis might also focus on a part of continuing leadership development
of executives in which the board offers feedback concerning areas where executives requires
performing better job, learn innovative skills along with centering on certain attention.
Economics (2014) revealed that over years a drastic remuneration growth is observed for
executives and “Runaway” executive remuneration turned out to be considerable for directors
and shareholders.
2.2. Effectiveness of Control Systems within Companies
Freund et al. (2015) elucidated that organizations attain their objectives through
preparing strategic plans along with implementing certain effective control systems for ensuring
that their business operations are carried out as per the plan. Grasso (2016) stated that these
control systems are effective in making sure that the organization’s objectives comply with the
regulatory, legal along with internal standard requirements. A major factor of control systems
effectiveness depends on the quality of information received by it. Information within the control
system must be accurate and recent. The best controls attain certain information from points
where it is generated by operations like sales figures relied on invoices along with shipments
relied on packing slips. Grasso (2017) revealed that control systems can offer data within
accurate time but the systems might have to process various types of financial information,

5REMUNERATION REPORT ANALYSIS OF QANTAS
which would result in delays. An effective control system is highly flexible which indicates total
data accumulation and processing abilities which can be adopted by management in changing
situations. The control system must adapt in accepting innovative business processes which
facilitates management controls within new activity era.
2.3. Executive Performance and Reward Systems
According to Ireland (2015), Executive reward system based on their performance
encompass the company’s integrated procedures, policies along with practices in order to reward
its executives in alignment to their skill, contribution, competence along with market worth.
Such reward system is deemed to maintain suitable kinds of levels of benefits, pay along with
rewards form. Fu, Carson and Simnett (2016) stated that the reward system encompasses
financial rewards, which include variable and fixed pay along with employee benefits
comprising of overall remuneration. The executive remuneration system also includes certain
non-financial rewards such as praise, recognition, responsibility, achievement along with
individual growth and performance management systems. Certain major aspects of the reward
system includes procedures for measuring job values, personal contribution within the jobs along
with range and level of employee benefits provided that includes job analysis, market rate
evaluation and performance management. Geiger (2015) elaborated that there are certain
performance rewards that motivates employees in working to the best of their ability along with
retaining the best employee through identifying and rewarding their contribution. Geiler and
Renneboog (2016) elucidated that a major challenge faced by the managers at the time of
performance and reward management is through recognizing a way of carrying out performance
management that can make sense to both the employees and the employer along with doing work
for an organization to attain its goals.

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3. Company Review
Several effective remuneration methods are employed by Qantas for its executive team as
this contributes to enhanced company performance. Reward or remuneration management in
Qantas focuses on developing superior strategies in making sure that it attains success. The
company has developed several remuneration strategies for facilitating successful establishment
of remuneration program. Remuneration strategies of Qantas include controlling reward,
monitoring, developing reward system, analyzing reward theories. The types of remuneration
offered by the company are explained below:
Intrinsic rewards
These remuneration offered by the company is self-administered that is offered to the
employees those are motivated from inside from their own rather than any other rewards such as
gifts and bonus. The motivational stimulus in offering intrinsic remuneration is that it does not
rely on actions of other individuals as people tend to believe that extremely beneficial rewards
derives from an individual’s inner self. The executive remuneration system also includes certain
non-financial rewards such as praise, recognition, responsibility, achievement along with
individual growth along with performance management systems. Certain major aspects of the
reward system includes procedures for measuring job values, personal contribution within the
jobs along with range and level of employee benefits provided that includes job analysis, market
rate evaluation and performance management.
Extrinsic rewards
Extrinsic remunerations are externally administered and these tends took be financial in
nature. The reward system encompasses financial rewards that include variable and fixed pay

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along with employee benefits that all together includes overall remuneration. Qantas considers
increase in wages, special incentives or assignments in order to make the employees attain a
specific organization objective. At times extrinsic rewards of Qantas is simple as attaining verbal
complements, rewards for attaining an organizational objective, promotion, public recognition
and certain other additional responsibility. The motivational stimulus in extrinsic rewards relies
on the actions of several people that are different from intrinsic rewards as it emerges from outer
motivation of the individual (Melis, Gaia and Carta 2015). Such remuneration processes offered
by the company is deemed to be important for these rewards are motivating and through this they
feel they are appreciated and valued.
The type of executive remuneration process that is present in Qantas is explained below:
 Cash compensation: This remuneration includes standard cash salary compensation that
is received by the executives every year (Kostyuk, Stiglbauer and Govorun 2016).
 Deferred compensation: This remuneration system is followed by Qantas as this is
considered to be deferred till a long term date specifically for taxation purposes. In
addition regulation changes have decreased the popularity of this kind of remuneration.
 Long term incentive plans: Long term incentive plans of Qantas include certain
remuneration process that is associated with tax purpose performances. Current tax laws
supports pay for certain performance-type remuneration (Kanapathippillai, Johl and
Wines 2016).
 Option grants: Qantas offers a list of options that is accepted by all its executives and
information encompass expiration date along with strike prices.

8REMUNERATION REPORT ANALYSIS OF QANTAS
 Retirement packages: These packages are offered by Qantas to all its executives after
they are retired from the organization. This is vital to be considered as this might
encompass after retirement benefits for executives (Maiani, Mueller and Noll 2016).
 Executive perks: Qantas offers several kinds of perks to its executives that encompass
use of private jet, travel facilities are certain other rewards.
4. Findings Summary
Remuneration system of Qantas is deemed to be effective enough in delivering superior
performance for the company as well as its executives. In addition, it has been found out that the
airline has concentrated on paying a standard pay package to its staffs. In accordance with the
official data, the pay scale of Qantas is provided, which depicts the way the airlines makes
payment to its various staffs depending on their skills and designations. The base salary of the
flight attendant starts from 30,201 AUD, while an airline pilot or a flight engineer is paid around
44,380 AUD to 313,620 AUD. The maintenance supplier is paid around 60,000 AUD and the
payment of the baggage handler is around 32,576 AUD to 57,266 AUD (Qantas.com.au 2018).
However, the issues related to executive remuneration might lead to complexities in
corporate governance. Such complexities mainly occur at the time of issues among the board of
directors, owners and executives. The performance wise pay designated for the managers
intensifies the problems of the airline. This is because the managers might not provide priority to
the interests of the stakeholders, which might have negative repercussions on Qantas and the
entire economy. This might dampen the relationship of the airline with its shareholders and thus,
the impact would be on its corporate social responsibility as well. However, the airline has

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special types of rewards for all types of staffs to increase their level of motivation and this would
help in achieving the set organizational targets and goals.
5. Analysis of Remuneration Methods Used
Based on the annual report of Qantas in 2017, it could be found that 2017 has been an
excellent year for the airline and its associated shareholders. This is because it has met its
commitments made to the shareholders by outperforming the competitors and delivering superior
results. The share price of Qantas Airways has doubled over the course of the year and the
overall shareholder value has been superior of all organizations listed in ASX 100. However,
there has been decline in the following aspects:
 The disclosures related to statutory remuneration have been 6% lower for the CEO in
contrast to 2016
 The payment of yearly incentives is made; however, the level is lower compared to 2016
(23% lesser for the CEO)
 The total cash payment has been 28% lower for the CEO in contrast to the previous year
 The total payment outcomes have been 3% greater in contrast to 2016 (Qantas Annual
Report 2018).
Over the last three years, the share price of Qantas has increased from $1.26 in 2014 to
$5.72 in 2017 due to the structural changes delivered under the Transformation Program. The
long-term performance awards to the Executives have been at a greater level in contrast to a
nominal year. This is because of the one-off pay remix for the Executives, which involved
minimizing the weighting towards yearly incentives along with enhancing the weighting towards
long-term incentives for the specific year (Minerals 2015). The remuneration outcome of the

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CEO for 2017 has been $10.1 million and there has been additional realization of $14.5 million
through LTP, which is driven by the growth of share price over the past three years.
Moreover, the Remuneration Framework has been reviewed on the part of the
Remuneration Committee and as a result, it has approved changes for assuring continued
alignment at pay with the business objectives, shareholder experience and performance. The
airline has made the following changes to the Remuneration Framework on July 2017:
 Application of a new cap, which is maximum outcome, is made under the yearly
incentive plan.
 The pay mix of the CEO has changed, since greater weighting is provided to long-term
incentives and the weighting on yearly incentives is minimized.
 The rights, which are awarded under the LTP, would be carried out with the help of face
value allocation methodology (Ncube 2015).
Hence, based on the above evaluation, it could be inferred that Qantas Airways has been
effective in developing its remuneration strategies for improving overall business performance.
However, it needs to work on certain aspects for further improvement along with maintaining
competitive advantage in the Australian aviation industry.
6. Recommendations
Based on the remuneration report of Qantas Company, certain effective recommendations
are provided to the company in enhancing its reporting and widening its performance measures.
Such recommendations are explained under:

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 Performance management and reporting of Qantas must focus on offering information
which is factually based along with measuring progress, effectiveness of certain process
at the time of monitoring in case outcomes are attained.
 The company must focus on analyzing and reporting performance that can ensure data
gathered answered required questions and makes sure that data is enough to attain certain
constructive conclusions. While reporting, Qantas must consider analysing as the
gathered data is not always a real reflection of real performance in which more than one
raw information input is provided to attain real picture. At the time of reporting, if the
raw data is out within the analytical stream this requires being grouped within simple and
understandable manner in tabular, graphical, statistical and singular chart form. This is
for the reason that the data must be simple for bringing in conclusions.
 Qantas remuneration report is recommended to cover all the factors of its operations
ranging from concept to distribution along with addressing the lifecycle of the business.
Certain aspects that the company must consider to include within the remuneration report
are employee health and safety, environmental and social responsibility, process safety
that are being employed along with encompassing security factors of the company.
 Reporting of Qantas encompass the fundamental aspects of risk management, leadership,
implementation and improvement along with encompassing the aspects of established
structure along with setting anticipated outcomes as the business of Qantas is deemed to
benefit from effective preparation of its performance reports.
7. Conclusion
The objective of the current report is to develop a summary of the literature researched on
a specific topic of executive performance analysis along with remuneration an Australian public