Qantas executives will reportedly receive a A$91 million pay-out, including $8 million for chief executive Geoff Dixon, on their last day of employment with the ¡°old¡± airline if the controversial $11.1 million Airline Partners Australia take-over goes ahead.
The executives will cash into the new airline with cash and share incentives from the new private equity owners, including bonuses of up to 200 percent of their cash salaries; a stake in the new company of up to 4.5 percent; and a performance fee for Dixon as high as $60 million.
They will reportedly get the pay-out, for shares worth millions of dollars, even when they have not met all normal performance measures.
Qantas said the reports overstated the value of accelerated equity by more than $23 million and said the inflated figures appeared to include shares and rights from previous incentive plans, dating to 1999.
The reports said Dixon and the chief financial officer Peter Gregg will receive about $5 million from the old company before they report for work at the new company.
Unions expect to lose jobs under the new company, which is likely to send more maintenance work overseas.
The pay-outs for shares and share options are reportedly related to ¡°change of ownership¡± provisions in the managers¡¯ existing contracts, and the necessity for new owners to acquire all the outstanding shares of the company.
Dixon was awarded 300,000 shares in October last year. Under the award approved by shareholders at the annual general meeting, he would be eligible to receive the shares on June 30, 2009 if he met certain performance targets.
But under the terms of the take-over offer, Dixon will reportedly be paid out for the shares as a ¡°long-term incentive¡± at the offer price of $5.60, a total of $1.7 million of his $8 million payment, if the bid succeeds.
Gregg will receive $2.2 million of his $5 million pay-out for ¡°out-of-themoney¡± shares.
Dixon has said he plans to donate proceeds of his new long-term incentive plan, potentially worth $60 million, to charity.
But the take-over offer is facing increasing political and shareholder flak. Qantas shares have slipped further to $5.16 as speculation grows that fund managers who could block the deal met the Qantas board to explain why they felt the $5.60 offer was too low.
One major Qantas shareholder, UBS Asset Management and Balanced Equity Management, is reportedly considering whether to reject the offer of $5.60 a share, raising the spectre of fund managers blocking the 90 percent of shares sought by the consortium.
UBS, which holds about 6 per cent of Qantas, could join forces with another shareholder and could produce a combined stake big enough to block the deal.
There was some speculation that UBS might be positioning itself to become a shareholder in the private equity deal. UBS refused to comment.
The largest shareholder at the time of the offer, the US-based Capital Group, has sold down its stake from 12.9 to 5.5 per cent rather than accept the higher bid price.
The deal is subject to reviews by the Foreign Investment Review Board and the Australian Competition and Consumer Commission, with the March 9 deadline widely expected to be extended.
¨C John Spiers
