Please Define, Bribery and Corruption?

So, Geoff Dixon, retiring CEO of Qantas, has had a case of that strange  executive disease “wonderful hindsight” with regard to the flopped takeover of Qantas last year!

http://www.news.com.au/travel/story/0,26058,24656809-5014090,00.html

Qantas has been on downward spiral for some time in the areas of engineering, safety, administration, staff morale and international reputation since Mr Dixon took over, and, of course, the share price isn’t exactly “shout it from the rooftops” stuff.   Doesn’t seem to affect Mr Dixon’s income though… 

As one of the more high profile “Robber Barons” – Mr Dixon’s package of $11.92 million for the year to June included a $3 million cash bonus and almost $6.4 million in share-based payments {ho! ho! ho!}, Qantas’ annual report shows. The year before he earnt $6.5 million (Reality Check! Did your salray package double last year?).   He is also expected to receive in excess of $6 million superannuation after just 14 years – don’t you just wish!

Now that he’s retiring, he’s suffering a  case of “hindsight” (funny that) and “has admitted that he is relieved that a private-equity takeover of the airline failed last year, despite strongly backing it at the time”.   WoW!    Remember all the hugging and kissing at the press conference when they thought the deal was going through!

If the deal had gone through what would Qantas look like now?   Allco Finance group was a ”key member” of the private equity consortium!

Qantas paid, (are still paying!), a CEO who has made a very serious error in judgement (how many more?) – he wanted the deal to go through and, but for luck,  (not good management or judgement),  we, the taxpayer, could have  been bailing out our national airline (governments seem to think they are important – national pride and all that…)…if you or I made a business decision like that, we would be out on our ear…certainly not paid a 60% bonus on our salary!

Mr Dixon “defends” his enthusiasm for the takeover because, the ”… issue was “clouded by emotion” because Qantas board members and management stood to make huge personal gains from the $11 billion deal, Mr Dixon told The Sunday Telegraph.

Clouded by bloody, emotion?  What sort of management team are you running Mr Dixon? What emotion? PURE, PERSONAL, GREED!  ABSOLUTE SELFISHNESS!

 He, (Mr Dixon), had vowed to devote his $70 million cut to creating a charitable foundation.  How generous of him – bit like you and me giving away $50 to charity – note that his, was a “foundation”,  he would no doubt be CEO, or an Executive Director (don’t need to do anything) and be paid a retainer…for the rest of his life…tax free…yeah…generous gesture, Geoff…

Mr Dixon also said:

“The real issue I’d never repeat was having the management – myself and the management – involved in it.

“The real Achilles heel was that it got very, very emotional – principally because I and the senior management team were going to earn tens of millions of dollars as part of it.

“That’s the way private equity works.”

That’s exactly what some of  us were saying at the time, Mr Dixon!

Beware the wolfish grin and the articulate, CEO.   Little Red Riding Hood, like all good fairy tales, has a hidden but very profound message…

…and we don’t need to review, tighten (or properly police!) our business and financial industry regulations?   GMAB!

TB

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79 Responses

  1. Ooops! Joni – missed my monica can you edit please, ta! TB

  2. TB

    Editing completed.

    😀

  3. The thing that gets me about Geoff Dixon, is that he seems to be such a heartless bastard. But then he is a CEO, and this is one characteristic they all seem to have in common.

    He’s been absoluetly ruthless in slashing local jobs, and moving jobs offshore where labour is cheaper, and maintenance costs lower (read this as inferior too).

    Personally, I shed not a tear at the demise of Qantas. The cabin crew are amongst the rudest I’ve ever encountered.

    The only time I fly with qantas these days is when I have FF points to use up, otherwise I never consider them.

    Ratbags!

  4. Dixon is still only a minor obscenity. But an obscenity nevertheless.

    Recently (in the last 7 days) a US congressional committee interviewed 5 hedge fund principals, each of whom earned in excess of $1 billion in the last financial year. That’s approximately $20 million a week or about $4 million a day.

    The TV footage showed the mansions in which they lived on absolutely magnificent estates. (In the US if you go bankrupt they don’t touch your home even if you are silly enough to have it in your own name).

    I note also that the G20 summit calls for a curb on CEO excesses. But it won’t happen.

    Clearly this attack on the ‘rich’ is an example of John Howard’s ‘politics of envy’ which was so effectively used against the Labor Party and its stated desire to administer more equitable education funding.

    TB you must stop your ‘politics of envy’ and become like Joe the Plumber. You must understand that you too will one day become excessively rich. If not in this life then certainly in the next. That’s why religion and capitalism are so closely bound.

    A good post by the way.

  5. Nice post TB.

  6. Reb – “slashing local jobs”..

    Now please let us know exactly how many jobs Dixon has “slashed”.

    I think if you examine the employment levels of Qantas over the past decade or so you will find that there it is a bigger employer now.

    TB – Perhaps before directing the criticism towards Dixon, we should have a look at that other stalwart of Australian aviation industry, Sir Rod Eddington. Sir Rod is now a trusted advisor to the ALP government, practically running the infrastructure investment.

    In the past he has overseen the decline of Ansett, British Airways and was a director of Allco, the company that made the bid for Qantas. Allco has failed.

    Now a director of numerous public companies, including Rio Tinto, and set to become the chairman of ANZ Bank. We can only hope that his future is more successful than his past.

    In this perspective your criticism of Dixon is fairly misdirected.

    Perhaps a post on the appointment of Eddington as a trusted advisor to our government would have a little more to do with public policy.

  7. Nature 5 – “politics of envy” 😆 Truth justice and honesty – then the buggars will earn a fair days pay – and probably my respect!

    6. Tom of Melbourne | November 16, 2008 at 10:20 pm

    Tom, I don’t care who they work for their remuneration is insulting to the average hard working Australian – you’re comments only reinforce my post – thanks…

  8. Really TB?

    The article you have written is entirely about Geoff Dixon. There is no general comment about the overall levels of executive remuneration, no comment along the lines of suggesting this is a case study.

    It looks like yet another excuse to have a go at Qantas, which I find to be a most annoying characteristic of the carping, politically correct class.

  9. And could someone provide the actual evidence of the “job slashing”?

  10. TB

    You tell em like it is brother. Doing me proud TB,

    Cheers

    We can only hope that the myth of the super-manager is coming to an end. I do anyway.

    How the fallout from the financial crisis could breed a new type of corporate leader

    http://money.cnn.com/2008/11/13/news/companies/reingold_newleader.fortune/index.htm?postversion=2008111406

    In the early 1980s, leadership became defined by a focus on the individual, a celebrity worshiped by business magazines like ours. The Visionary CEO – think Lee Iacocca or Jack Welch – personified a corporation. The twin goals that defined earlier eras (helping both stakeholders and shareholders; building a business for the long term) were refined to one simpler one: that, as economist Milton Friedman declared, “the social responsibility of business is to increase profits.” Compensation became tied – primarily through the use of stock options – to ever more dramatic moves, such as mergers, acquisitions, or other gambles. The stock price was widely accepted as a real-time CEO report card, the numerical proof of success, even as most stocks were on the rise.

    “We took the complex nature of leadership,” says management thinker C.K. Prahalad, “and converted it into a single metric by basing compensation on the stock price.”

    The faults of visionary leaders were first brought to light during the Enron era and the dot-com crash. There were a few calls for change – Collins, with his “Level Five” leader, and Khurana, who showed that “charismatic” CEOs didn’t boost performance in the long term. But the visionary persevered, his gambler’s instincts honed and rewarded in a lightly regulated, winner-take-all environment.

    Stanley O’Neal took over as CEO of Merrill Lynch in 2002 with the express mission of catching up with the more aggressive trading firms. He bet – and ultimately lost – his nearly century-old firm on subprime and outsized leverage (and when the bet went bad took a $160 million severance package on the way out the door).

    While visionary leaders talked about teamwork, they believed they could control their firms’ destiny by themselves, citing any attempts to regulate their businesses as hostile and anticompetitive.

    This leadership approach has failed. According to a recent study from Harvard’s Center for Public Leadership, confidence in business leaders saw a more dramatic decline than that for any group, including politicians or the media.

    But in the void left by the visionaries, a new model is emerging. Collins thinks that legislative, not executive, skills are now ascendant – that top CEOs will be those who are able to create the conditions for things to get done rather than hand down orders (as Hank Paulson learned, what worked at Goldman Sachs didn’t fly in Congress).

    David Gergen, the political expert and director of the CPL at Harvard, agrees. “The CEO of the future is going to have to be someone who deals well with government,” he says. The truth is, these days a CEO cannot fully control his destiny in a world of competing entities, ranging from regulatory agencies to angry shareholders, from consumers to foreign powers.
    The ability to look beyond the short term to the horizon and inspire employees is another must, given what looks like a prolonged economic slump. Xerox (XRX, Fortune 500)’s Anne Mulcahy, for example, has brought the company back from the brink by rallying her employees around the challenge itself rather than throwing money at them. At Home Depot (HD, Fortune 500), CEO Frank Blake accepted an annual pay package worth one-quarter of his predecessor’s, and he is also finding creative nonmonetary ways to motivate employees, including giving merit awards for great customer service and assigning store workers more decision-making power. “

  11. Tom, the post is just one an example of poorly performing executives receiving obscene amounbts of money for non-peformance.

    Dixon’s case is one of many – and there are quiite a few – Dixon is the second highest paid airline executive in the world…

    …he, and others of the Qantas Board and senior management were being bribed with large cash payouts to make “emotional” personal decisions rather than look ahead to the welfare of Qantas, its shareholders, staff and customers – greed at the highest level and awful management technique! – he just happened to be working for Qantas.

    Qantas’ standards either have dropped (according to the flight engineer and pilots I know – purely anecdotal) or they are percieved to have dropped, either way that is the responsibility of the CEO – Dixon – he’s in denial – public perception continues – he gets a bonus – would never happen in businesses I’ve worked in and/or managed…still I’m just a working class lad…

    HD – thanks

    joni – ta

  12. Tom,

    It is no myth that Qantas moved much of its on the ground maintenance to SE Asia, where parts and labour are cheaper, and cabin crew for long haul flights were recruited and based in those international destinations at the expense of local crew based in Australia.

    Evidence, you ask?

    “Qantas has announced it will be cutting 1,500 jobs worldwide and will cancel plans to hire 1,200 new employees this financial year. Around 1,200 of the axed jobs will be in Australia, while the other 300 will come from the airline’s worldwide operations. Mr Dixon says the redundancies will be made by December.”

    http://www.abc.net.au/news/stories/2008/07/18/2307412.htm

  13. …and JMc, thanks ya big black bugger! (refers to avatar!) 😉

  14. TB – do you mean flight engineers or aircraft engineers?

    Qantas employs plenty of aircraft engineers, I don’t think there are many flight engineers left.

    Aircraft engineers are usually fairly inert types, no doubt they think it is a decline in aviation standards when their brand of tea bags is changed.

    Qantas continues to employ about 90% of its workforce in Australia. Unlike Virgin etc it maintains a large in house maintenance program, it has not engaged in large scale outsourcing. The competitors of Qantas deserve far more examination than Qantas.

  15. “The competitors of Qantas deserve far more examination than Qantas.”

    Why? Qantas is meant to be the national airline.

    You asked for evidence that Qantas is “slashing jobs”

    I gave it to you.

  16. Reb – As I understand it, Qantas sends maintenance overseas when there is full or near full utilisation of Australian facilities. It is not sent for cost. The work overseas is supervised by Australian aircraft engineers, to Qantas quality standards.

    Qantas bids for maintenance work on other carriers aircraft when it has a spare slot in its maintenance program. It performs work on many non Qantas aircraft. That’s how airlines get near full utilisation of their facilities.

    I’m aware that Qantas is in the process of reducing its workforce by 1500. The axe has relatively fallen more heavily on overseas operations. Most of the reduction will be through retirement and voluntary programs. People like Christine Nixon’s husband will leave with a good package and discount airline travel, for them and their families.

    But an important fact is that Qantas employs far more people now than it did when it was government owned, far more than 10 years ago.

    It is a successful Australian company, it employs over 30,000 people – generally union members. It is an outstanding airline.

    You should give it a boost rather than tear it down.

  17. You asked for evidence that Qantas is “slashing jobs

    I gave it to you

    Yes, but that runs contrary to Tom winning the argument… time to change… er, refine the subject.

    I don’t doubt that there is terrible CEO’s & executives in other airlines and other industries… bad their bad behavior doesn’t excuse or mean I should condone that of Quantas execs.

  18. “to Qantas quality standards.”

    I guess you missed the documentary that highlighted the ‘quality’ of some of the SE Asian engineer’s workmanship…

    “You should give it a boost rather than tear it down.”

    Why? Their service is attrocious..

  19. Reb – I didn’t see the documentary, but I have noticed the defence, the airlines concerned have responded. For example Singapore Airlines Engineering Company is a very capable organisation in aircraft maintenance, Malaysian is similarly capable.

    I’d suggest that some of the quality problems are not so much the work actually done, it relates more to documentation. Documentation processes in the airline industry are understandably exhaustive, and many airlines have these problems.

    I’d also suggest that it is quite likely that some of those involved in the quality review would have been part of the union that opposed this overseas maintenance program, they were involved in a high profile dispute with Qantas during this period.

    I think tearing down companies that provide plenty of jobs to an Australian workforce is short sighted. The option in this industry is loss of market, loss of jobs, loss of skills, and loss of opportunity for the future.

    Loss of Qantas as a viable airline is a bad result all round, and I’m happy to repeat that I won’t be part of tearing it down.

  20. Loss of Qantas as a viable airline is a bad result all round, and I’m happy to repeat that I won’t be part of tearing it down. Tom

    I agree with you Tom, but it doesn’t seem to bother Geoff Dixon much!

    …and this post is not about Qantas – its about incompetent CEO decision makers (supposedly) continuing to be paid obscene (nay, ludicrous) amounts of money to FAIL and being offered large amounts of money to sell Qantas in your own words a viable and and what should be profitable business…

    Dixon and his cronies have failed Qantas – not reb, and other travellers who voice their concerns…

    …this about the Robber Barons – still at work…still fleecing

    Disclosure: I have been and continue to be a Qantas Frequent Flyer since 1996…

  21. Well TB, I was responding to the recent comment of Reb.

    Dixon is no better or worse than most other CEOs & MDs. The difference is that you’ve singled him out for this harsh criticism.

    I’ve responded by pointing out that the trusted business advisor to the ALP government is Sir Rod Eddington. Sir Rod was MD of Ansett and bailed out only months before it failed, then MD of British Airways, during a period of growth for the airline industry internationally, but BA went into decline under his stewardship. He was a director of Allco, the financier of the failed Qantas private equity buyout, Allco itself then failed.

    As I pointed out, Sir Rod is a trusted advisor to Rudd, and will be chairman of the ANZ.

    I obviously think you could have easily found a more legitimate target for your criticism.

    Picking on Qantas is far too popular, you should rotate the batting occasionally.

    I travel with Qantas regularly, and find little to complain about. When I do find something that bothers me, I let them know – long and loud.

  22. Tom,

    This is not about Sir Rod or anyone else. It is not about the standards of Qantas.

    It is about the fact that the Qantas board – led by Dixon – stood to personally gain from selling Qantas. A decision that commentators stated loudly as being a bad decision because the judgement of the board was probably clouded because of the personal gains that they stood to make.

    Those commentators were ignored.

    And now it turns out that they were correct in their assessment.

    Dixon has admitted that was part of a group that made a bad decision, and as such, should be held accountable.

  23. Tom

    You speak of Sir Rod Eddington and I agree. However look at Geoff Dixon, leaving Qantas at a horrible time in its history after he was the CEO. Most CEOs tend to bail as soon as things get difficult.

    They are all for standing up and smiling with glee when things are rosy. They seem unable to do the distance when things get tough or they are not riding a boom time.

    They would get more respect if they decided to stay and tough it out rather than be seen to be fleeing at the time when things are going wrong with all of their bonuses and super.

    That is the disgrace.

  24. Joni – Obviously I think your view is far too narrow. If the Qantas board had been able to deliver the $5.40 share price, they’d be heroes now. The shareholders would probably prefer $5.40 to $2.40.

    But the comments by Dixon are more frank than those usually offered by those heading large organisations. I’d prefer to think that he has been more direct than many of his corporate counterparts.

    Sir Rod, an architect of the private equity buyout etc , on the other hand remains in a powerful corporate and influential government policy position. Not a squeak of criticism about this. (other than the fair comment just posted by Shane).

    Severe double standards in my humble view.

  25. Tearing it down doesn’t mean avoiding proper oversite, regulation and scrutiny. CASA should be concentrating on regulation as a public safety issue rather than having a friendly and cosy ‘relationship’ with Qantas.

    http://www.aph.gov.au/senate/committee/rrat_ctte/casa/report/report.pdf
    Standing Committee on
    Rural and Regional Affairs
    and Transport Administration of the Civil Aviation
    Safety Authority (CASA) and related matters

    http://www.theaustralian.news.com.au/story/0,25197,24402222-23349,00.html

    “…This move towards self regulation and risk-based safety management has also been an issue in the US and Canada. Worries about the US Federal Aviation Administration’s close relations with airlines has resulted in legislation requiring the regulator to give the safety of the travelling public a higher priority than “preventing dissatisfaction” among airlines.

    The committee said CASA appeared to be falling short of achieving an appropriate balance between systems audit and specific operational surveillance…”

    “…It observed that CASA believed Qantas needed to address questions of accountability and responsibility in relation to its maintenance.

    “The committee considers that a more prudent regulator would satisfy itself that clear lines of accountability and responsibility exist prior to the delegation of responsibility rather than wait for obvious evidence of failure of self-regulation before embarking on a more hands-on regulatory role,” the report said. ..”

    http://www.news.com.au/dailytelegraph/story/0,22049,24470097-5005941,00.html
    (DICK SMITH) “A decade ago I warned what the results would be if strong enforcement – using administrative fines – did not take place, he said.

  26. Tom,

    As we have said before – if you want to contribute by writing a thread of your own – we would welcome it.

    This is NOT double standards, IMHO. This thread is about Dixon and how the private equity buyout of Qantas last year we view by some as a mistake because of the amount of debt that would be left in the final company. That has proved to be true.

  27. If the Qantas board had been able to deliver the $5.40 share price, they’d be heroes now. The shareholders would probably prefer $5.40 to $2.40.

    IF they had been taken over the share price MAY be a lot worse than $2.40 – Allco went bust – remember…

    Tom, Dixon, the Board and senior management were BRIBED with the prospect of personal cash payouts – Dixon now agrees that was WRONG – at the time it was OK by him – at the time many people were crying foul – me included! No ifs, mays, mights, coulds, it is fact – whether the shares go up or down it was/is WRONG -fact! Heroes my arse – tin pot thieves…no better no worse!

    Re: Sir Rod Eddington (wasn’t he in, “Yes Minister!” 🙂 ) Robber Barons are usually easily recognisable these days, thanks to The Firm – they often give ’em a title, Sir, is a dead giveaway in my neck of the woods!

  28. Paul Eddington TB, Paul Eddignton…

    A gentleman indeed, sadly passed away from cancer, when interviewed about what he’d like on his epitaph he gently said “He never did anyone any harm”

    If only we could all be remembered like that…

  29. I know, sreb, I know (’twere an attempt at humour) and I agree wi’ yer sentiment, laddie, “clink” BTW.

    Has Min, done those bloody spuds yet?

  30. Gone yerself TB, and *clink*

    this shiraz is going down rather nicely (so to speak).

    Aye Min hen, where r ye at wae those totties?

    Ave, got sum mince on the stove…

  31. Oh! Apricot Chicken and Rice for, moi!

  32. Back on topic – is this fear or conscience? The cynic in me says fear – these bastards will always try for what they can get…

    …my kids and grandkids already know that leopards can’t change their spots!

    http://www.news.com.au/business/story/0,27753,24664120-462,00.html

  33. Is this fear or conscience? The cynic in me says the former!

    These bastards will always go for what they think they can get away with!

    …my kids and grandkids already know that leopards can’t change their spots – only camoflauge them

    http://www.news.com.au/business/story/0,27753,24664120-462,00.html

  34. Fair point kittylitter. You might remember that CASA went after Ansett over safety before their collapse. CASA stopped them a couple of times, I think once over Easter.

    There is a view that this so severely undermined public confidence in the airline, that they were doomed from then.

    I think CASA need to be careful not to inflict this outcome on other airlines (including Qantas), while maintaining their statutory obligations. They don’t want to be seen as anti airline.

    Reb, at the time, even I reserved my endorsement of the private equity buyout. I think there is a lot of latent value in Qantas, including plenty of poor work practices to be addressed. It was an attractive target.

    But I think the actions of Dixon were on the same scale as others, including Sir Rod. Yet you and others seem to isolate your criticism to Qantas.

    Sir Rod holds a far more esteemed position with government despite his own actions. That is a fact.

  35. “Yet you and others seem to isolate your criticism to Qantas.”

    I rejwect that!

  36. Still, trying to hijack, the plot I see, Tom

    I suppose the story below is a case of conscience?

    The bastards go for what they can – leopards can’t change their spots only camoflauge…this is fear…

    …BTW you’ve still (deliberately I suspect) missed the issue, Dixon & Co were quite willing to accept payouts to sellout Qantas – only now – when he is retiring does he recognise the truth – I’m still hoping you will…

    BTW I am still trying to locate a Union boss paid over $150, 000 a year can you help?

    http://www.news.com.au/business/story/0,27753,24664120-462,00.html

  37. Tom how is it CASA’s fault if an airline fails to maintain standards?

    You are not seriously suggesting that company profits are more important than lives are you?

    It is the COMPANIES responsibility to ensure they are compliant with industry regulations.

    Why is ‘individual responsiblity’ such an imperative, yet corporate responsibility so shunned? Oh yeah the free market, can’t have any restrictions to profits now can we, even if the public are put at risk.

  38. Tracie, airline safety regulation is quite complicated and I’m no expert. CASA does not enforce their own standards as much as hold the airlines to the procedures specified in their own maintenance and safety systems.

    The system is also overlaid with some traditional work practices. Regulation is not simple.

    Individuals in this system do accept accountability, as they have certifications for safety and approval to operate that CASA issues on a personal basis, rather than to the airline.

    CASA was particularly rigorous in enforcing standards at Ansett, that may have been in the interests of the airline industry or not. I’m not able to make a particular judgement about that.

    TB – I don’t miss points, quite the contrary, I make them.

  39. Tom I was referring to the ‘individual responsibility’ that some are so enamoured with in relation to social issues. Some of those same people have contrary views when a corporation is expected to be accountable.

  40. Tom

    I see your point as well however Mr Dixon has admitted he was wrong in hindsight when the rest of australia including the majority of shareholders could see he was wrong from the beginning. It is mazing to see his face now, gone are the smiles laughter and kisses and in its place a tired looking man struggling with the ramifications.

    You always mention traditional work practices as thought they are an enema to companies. Maybe just maybe if Mr Dixon consulted more with unions and was fair in his pay to the workers not just the elite management then things would be different. QANTAS was an icon of safety, reliability, sevice and patriotism. I doubt the same could be said today. Terrible staff morale, far tool much management and far too few workersd serving the public and sevicing the planes.

    If CEOs took a leaf out of Paul Simons book and paid themselves no more than 30 times the lowest paid worker, then maybe there would be enough staff to service customers at a satisfactory level. The queues at checkins are a disgrace. 15 windows and 2 open with customers queued to the rafters. This was not the case before the airline was sold off.

  41. Hi Shane

    I use Qantas quite a lot, and while I think that service can be a lot better, it is still a lot better than most of the airlines I’ve used here and overseas.

    There are now far more people travelling than when it was government owned. I think Qantas itself has about 4 times as many aircraft now as 15 years ago. Airfares are much cheaper.

    Overall, Qantas has done a pretty good job, in my opinion. The company deserves a lot more credit for this performance than it seems to get.

    In terms of work practices, Qantas is loaded up with about a dozen unions. The one covering the engineers recently involved in the dispute is one of (probably) 8 to10 unions covering the work in the engineering and maintenance department!! About 10 unions all looking for their own role, all trying to find some relevance, all trying to define the work they cover. All sending out officials to pester management, all trying to prove exactly how relevant they are.

    Then we have unions covering pilots, cabin crew, check in staff… and not forgetting the highly efficient baggage handlers that look after our luggage with such care.

    Unions in Qantas are a handbrake on reform; they impose inefficient work practices only in their own interests, rather than in the interests of workers, shareholders or the travelling public.

  42. Woosh – there goes Tom missing the point again.

  43. Joni – missing the point??? Me??

    My thesis is –

     Dixon is no better or worse than other most MDs or CEOs.
     Overall Qantas, as an Australian company, deserves more credit than it gets.
     Shareholders now probably wish they could get $5.40 for their shares.
     The proponents of the private equity buyout include Sir Rod, a most influential business advisor to our government.
     Sir Rod’s track record is hardly one of uninterrupted success.
     Why this isn’t the subject of equally strident criticism as that directed towards Geoff Dixon is beyond me.
     Union/traditional work practices retard efficient performance of work in Qantas.

    Maybe Dixon was attracted on a personal basis, but if $5.40 per share was offered now, how many shareholders do you think would take up the offer??

    The issues are multi facetted, and I’ve sought only to highlight some of the other facets. You lot prefer to deal with a single dimension. It is simpler that way.

    The world according to the politically correct – Dixon – BOO!! Unions – HOORAY!!!

  44. I call shananigans on Tom.

    This thread was purely about the buyout of Qantas that the board approved and which would have given them massive personal gains. The deal last year was exposed prior to it being completed as a bad deal – where those pointing out that it was a bad deal were ridiculed. The deal is now shown that it was a bad deal.

    The union point is being raised by you.

    The Sir Ron point is being raised by you.

    I will let others judge whether my call of shenanigans is true or not.

  45. Joni – shenanigans is a synonym for tomfoolery, so there may be something in your suggestion!

  46. Tom

    How much did Dixons salary rise by since he started and how much did the workers salaries rise by. How many FULL TIME staff have been thrown on the scrap heap with contractors and casuals filling the positions to avoid holiday pay and superannuation contirbutions. You need to look at Full Time Staff numbers not this Full Time Equivalent rubbish they carry on with now.

    Jetstar was created simply to employ workers at lower pay rates and much less working conditions ( this was as a result of Qantas taking over a low cost airline and changing the companies name to Jetstar this allowed all future employess to be employed under the cheap labour contracts. Remember we were told Jetstar would not operate in Qantas areas, well that has died a very fast death. Qantas appears to be pulling their services and replacing them with jetstar wherever they can. Of course all the routes where politicians fly remain Qantas ( funny that)

    You really have it in for unions don’t you. It seems you don’t want workers to have any rights outside of what management, (who we know are generous, thoughtful, kind and supportive of their staff) decide. I prefer all sides negotitate, problem is management says this is what we will offer and thats it. If that is lower than inflation what do the workers do without union support ?

    Following a quote form the Weekend Australian last weekend regarding the USA showing how anti union that country became under George Bush.

    “Proponents of card check say it will remove the clear bias against unions that exists in their present law. In many cases employers bar union recruiters from the workplace education while hiring outside consultants to run anti-union sessions that workers are compelled to attend”. Fair workplace Tom ?

    CEOs in my opinion no longer show leadership and strength of character. What they now show is a slash and burn mentality to inflate profit and share prices over a short term to obtain ther short term performance bonuses and options.

    If Mr Dixon was a good CEO he would stay instead of now limping away while Qantas ( at times incorrectly) is being battered from pillar to post over its reputation.

  47. If CEOs took a leaf out of Paul Simons book and paid themselves no more than 30 times the lowest paid worker, then maybe there would be enough staff to service customers at a satisfactory level. The queues at checkins are a disgrace. 15 windows and 2 open with customers queued to the rafters. This was not the case before the airline was sold off.

    If the minimum wage is $545 (odd) gross a week, that would make a CEO’s pay over $163 000 per week! That is still excessive IMO. Why would anyone ever need more than say $20 000 a week? Except for breathtaking greed.

  48. Tracie

    My point is most CEOs now earn over 200 times the average salary. Paul Simons who ran Woolworths while building it into the company it is today never permitted himself or anyone else from being paid more than 30 times the lowest paid workers salary. If all CEOs did that today imagine how many more employees would be saved from being shunted out the door due to cost cutting. And those employees could continue to buy the goods and services these CEOs companies provide.

  49. I get your point Shane I just don’t understand why this should justify CEO’s earning 6 figure WEEKLY salaries.

    If those CEOs at Woolies were earning $20 000 a week instead of $163 000 per week, Woolies might be able to pay farmers a decent price for their produce and offer the product to consumers for a better price.

  50. Just a small point Tracie – $545 * 30 = $16,350 which is still $850,200 pa. Unfortunately too many are now getting $8,476,000 ($163,000 per week) or more though…

  51. Shane – how many unions do you think should be involved in representing the maintenance workers at Qantas? 1, 5, 10? Really this is an important example of the inefficiency of our IR system.

    CEOs seem pretty well paid to me, and I wouldn’t have a problem if their pay was moderated.

    But Qantas is a company with about $10bn revenue, so the top person will always command whatever the top rate is for a CEO.

    I suppose Shane, you’d just have Qantas whither on the vine, while an aggressive Virgin, cheap Tiger, and a Singapore Airlines entrant take the Australian market. Qantas showed great sense in establishing a lower cost subsidiary to compete against these foreign owned aggressors.

    Unlike these foreign owned companies (and I note you buy Leggo tomato paste rather than one produced in China), Qantas continues to operate its own heavy maintenance facilities here in Australia, providing apprenticeship, employment and opportunity to many people.

    You seem to enjoy taking pot shots at Qantas management, but do you know how much the MD of the owners of Tiger earns? How much of the aircraft overhaul maintenance does Virgin get done here?

    If you make such careful decisions about your tomato paste, why not be equally loyal to our own airline???

  52. “If you make such careful decisions about your tomato paste, why not be equally loyal to our own airline???”

    “our airline?”

    Because it’s crap, that’s why Tom.

    Once you travel with Singapore Airlines, Thai or Malaysian, you only realise how bad Qantas actually is, and it’s pretty bloody bad in comparison to those airlines I can assure you…

  53. Oh boy was I out. Sorry guys.

    Anyway I would not object to CEO’s earning $20 000 odd a week (though I personally still find it very high) as long as the minimum wage was at least $600 p/w net.

    It is also not just a matter of achieving some sort of balance between minimum and executive pay, but ensuring such excess is not repeated.

  54. Tom the fact that Australian’s don’t fly Qantas in not a reflection on their patriotism, but another example of why Geoff Dixon was not worth the money he was paid.

    You would think a company with $10 billion revenue could provide a decent level of service.

    If they can’t it is hardly the consumers fault.

  55. Tom

    Despite my comments I AM loyal to Qantas. I only fly Qantas, you never asked me what airline I travel on. I have never flown overseas on any airline other than Qantas. I am a Frequent Flyer I fly Qantas wherever they operate and Jetstar ( with no choice) at other locations. So I speak from experience when I comment about the downgrading of conditions and service. Having a negative opinion of CEOs and what they do to companies and their greed has nothing to do with my loyalty to our own businesses. it has to do with how I think they are being run and screwed into the ground in the name of obscene salaries at the top.

    I agree 1 union for all workers ( but then you would probaly scream union monopoly). The point is you seem to want to take any representation of any union even if it is only 1 union from the workplace. In all your comments you seem to have a blind dislike of unions.

    To think Qantas would have withered and died if Dixon didn’t take the reigns is ludicrous. The profits it is making are amazing in an industry which are mostly running at a loss. Problem is profits now go to a few hundred thousand shareholders and management and not for the whole community.

  56. reb

    A lot of poeple have told me the other airlines are better, but I still support the flying kangaroo. I don’t support what has happened and is happening to it since privatisation and the disgraceful salaries paid to executives the moment it was sold off.

  57. Tomfoolery me one, shame on you
    Tomfoolery me twice, shame on me.

    You are continuing to attempt to drive this thread into union bashing and comparision against other airlines. If you want to write your own threads, reb and myself are more than welcome to set you up as an author.

    This thread is about the bad and self serving decision by Dixon last year to sell Qantas to a company that wanted to debt load the purchase back to Qantas, thereby putting all the risk on the new company whilst giving the directors BIG personal gains, and how Dixon was called on this matter and shot down those who dared to question the deal.

    And now he comes out and acknowledges that the deal was a bad one.

    I fly very frequently in SE Asia and will now no longer use QAF because of the service and comfort in economy, as well as the reliability. I now will fly via Singapore rather than direct because of this.

    The buy Australian point made above was stating how people will buy the same quality product (even when it is more expensive) to keep the money in Australia. Whereas me flying with other airlines is because the quality of the service from QAF is less than other airlines who charge the same amount.

    If Qantas had the same quality then I am sure that they would get more business.

  58. Shane I can understand your loyalty but sometimes such loyalty only serves to support bad practices.

    If the company’s bottom line is affected they may review the way they do business. $$ (or a decrease in) are the only thing that does seem to motivate big corporations.

  59. “If Qantas had the same quality then I am sure that they would get more business.”

    Exactly. I swore never to fly Qantas again after the last run-in I had with one of the cabin crew.

    I couldn’t care less whether they’re the ‘national carrier’ or not, if the level of comfort and superior service is better elsewhere, then I’ll take my money elsewhere.

    I will never fly Qantas again, nor their crap budget mob Jetstar.

  60. Reb, I travel a bit.

    I’ve experienced the service of most of the major airlines on most of the continents, including those you’ve referred to.

    As we appreciate, wage levels in most Asian countries are lower than our own. Cabin crew, check in staff in many airlines would be paid a third of Qantas, and I suspect there is a greater sense of pride/achievement in the job itself.

    Pilots and cabin crew will of these airlines will stay at cheaper hotels and receive lower meal/living allowances than those of their Qantas counterparts when travelling.

    Many of the employees associated with other airlines are employed through a myriad of subsidiaries and contractors, often specifically designed to avoid having to apply the airline employee benefits that direct employees receive. These employment practices would not be tolerated here.

    This is the cost effective/cheap competition that Qantas is up against. It has to control costs, or be decimated by these lower cost carriers.

    Nonetheless, I hold that the service of Qantas is generally is good, it is uniquely Australian, unpretentious, friendly. I find some of the airlines far too cloying, over eager – won’t leave me alone – always trying to fill my glass!

    Shane – I’m not arguing in favour of the private equity buy out – I’ve simply pointed out (among other things) that another, more powerful/influential businessman, who actually promoted the deal to Qantas and stood to gain significantly, seems to have escaped the same level of scrutiny and opprobrium. The fact that he is well connected to the government must have nothing to do with this.

  61. PS Joni – If I was writing a thread, this site would loose its legitimacy as a progressive, moderate, left leaning, sensible, friendly and enjoyable one!

    Also, since when has sticking to the topic been part of the rules here?

  62. Tracie

    If the companys bottom line is affected it will not be the bosses but rather the workers who get sacked. Look at the ANZ their boss got a 25% increase in pay despite their sgares taking a hammering and they are getting rid of 1,000 employees.

    Look at Ten network, their revenue dropped 25% and their boss got a 70% pay rise. No doubt staff will be cut there as well to cover the obscene 70% increase in salary.

    I like to think my loyalty will at least keep a person in a job for that bit longer. Im not talkiing about the CEO either 🙂

  63. Tom

    The buck stops with a CEO, that is unless he can find a scapegoat or get out by retiring on his millions. Dixon makes the decisions at Qantas. I never disagreed with you regarding the other powerful man. However that powerful man is not the CEO of Qantas. If the other powerful person is escaping scrutiny and is connected to the government then that is a disgrace as well. I can only speak of what I know of Mr Dixon. There were many others who supported the private buy out as well but in the end Mr Dixon is the CEO of Qantas no one else.

    You talk about overseas employees being employed through a myriad of companies to avoid airline employee benefits. That is Exactly yes Exactly how and why Jetstar was created.

  64. Oh come on Tom – we actually want this to be more than a blog based on your comment above. That is why we honestly would like you to write threads… then we could stimulate more discussions.

    I am being completely honest, Tom. We value your comments and opinion. I know that threads sometimes go off on tangents, but you are deliberately trying to divert the thread onto union bashing and I have offered you an opportunity to state your case in a new thread.

    If you like – send me an email with a thread and I will post it for you.

    jon at tlc2 dot net

  65. Thanks joni, perhaps when I can think of something interesting and provocative to say.

  66. LOL Tom – cool bananas!

  67. “There were many others who supported the private buy out as well but in the end Mr Dixon is the CEO of Qantas no one else.”

    Mr Dixon also has a responsibility to make decisions that are in the best interests of shareholders whether or not that decision is in the best interests of the Directors and Executives of the company.

    It seems Mr Dixon is admitting that support of the takeover was ot in the best interests of shareholders and that the executives allowed themselves to be swayed by the prospect of personal gain.

    Dixon is rightly being criticised for that failure in his duties.

    “that another, more powerful/influential businessman, who actually promoted the deal to Qantas and stood to gain significantly, seems to have escaped the same level of scrutiny and opprobrium”

    Tom, can you explain how his spruiking the deal is a breach of his responsibilities to shareholders? The post is about Dixon admitting how the $$$$ clouded their judgement of the takeover not about the takeover itself. So, please explain what he has done that would deserve the same criticism as Dixon is receiving for his comments.

  68. Don’t get too excited, joni, Tom did say, “something interesting and provocative to say”. That could take a while!

    If he talks about unions can we sidetrack to executive pay?

  69. Late entry, I see.

    The price offered was $5.40. I wonder whether shareholders would like to get that price today? It is now trading at less than half that – $2.23.

    In hindsight, the private equity buyout may not have been good for the airline, but probably would have been fine for those owning shares. So in whose interests would Dixon have been acting if the transaction had gone through ??

  70. “So in whose interests would Dixon have been acting if the transaction had gone through ??”

    Hindsight is a wonderful thing, Tom. Did the deal look like it was in their best interests AT THE TIME? Appears Dixon is admitting that it wasn’t AND that the judgement of directors recommending it was clouded by the personal benefits they would receive.

    Now would you like to address my question of how Eddington breached his duty to shareholders based on what was known, AT THE TIME? Keeping in mind of course this thread is about Dixon’s pesonal interest admission and not the takeover itself.

  71. Tom

    The shares actually rose higher than $5.40 after the deal fell through ( actually traded above $6), so those that wanted $5.40 at the time could have sold.

    Being wise in hindsight about a share price is one thing. Saddling a company with 10 billion in debt via a private equity buy out is another.

    Dixons interests in the end would have destroyed the company and that is in no ones interest. A very fine line between acting in shareholders interests and the demise of a company achieving it.

    I thought a CEOs priority is to the company first, shareholders second. Afterall he is paid by the company and as we know shareholders actually cannot influence directors and CEOs salaries as they are decided by the board, despite votes against their increases.

  72. The price offered by Sir Rod and his cohorts was about a dollar above the price it was being traded at the time. The Board and the CEO was entitled to recommend acceptance of the offer in the interests of the shareholders. They predicted, correctly, that the price would fall once the offer disappeared.

    Equally, the shareholders were entitled to hold the view that the company was more valuable than this offer. They took this decision.

    In hindsight, I wonder how many now wish they’d accepted the recommendation of Dixon and the board.

    It looks like a pretty smart recommendation now.

  73. Shane, directors are required to act in the interests of the shareholders. This is quite specific in company law. As I outlined above, the share price did trade above the offer, because speculation was that there would be another, higher offer. That’s the judgment the traders (incorrectly) made.

    From a prudential point of view, the board made a recommendation that looks sound now.

    I think Dixon is now reflecting on what would have been good for the airline itself, as distinct from the interests of shareholders. The mia culpa is just to ease this sensitivity.

  74. Tom, Tom, Tom, you conveniently “forget” that the key player in the private equity finance group attempting to take over Qantas was Allco – emphasise WAS – its gone, its curled its toes , its gone to that finance heaven in the sky, it is not sleeping – IT IS EFFING DEAD!

    …and once again, Dixon and Co were being BRIBED…

  75. Tom

    Any board is entitled to recommendation.

    As for predicting the price would fall. Economists change their predicitions every day it was simply pot luck. All shares have dropped dramatically not just Qantas in this environment.

    They also very reluctantly and after much persuation at the time released income results that actually were higher than forecast in the bid.

    You talk about hindsight, well Dixon has admitted in hindsight that the offer would have virtually destroyed the company and it was recommended with clouded glasses. No matter what spin you put on it Tom the recommendation was flawed by those who stood to gain substantial amounts of money.

  76. Tom

    Acting in the interests of shareholders is a very broad statement.

    Do you think all the CEOs that have seen their company shares decimated as well in this climate acted in the best interests of their shareholders by getting in the messes they are in.

  77. TB & Shane, as we know, private equity buyouts are rarely long term investments. They see intrinsic or unreleased value in a company, do a bit of slashing and burning and then on sell it.

    We may or may not think this is ethical, but directors have to consider an offer on the merits of the price offered. They don’t have to have regard to the likely restructuring that will occur following sale, and a new ownership structure.

    $5.40 was rejected largely because some thought the offer would have to be increased. They must regret that now.

    Though I must confess that I voted against the offer, not through greed, I just preferred the idea of public ownership of this fine company. Who knows, others may have had similar motivation for rejecting it!!

    TB,I’ve pointed out on numerous occasions, Allco is no longer. It is an ex parrot. Though that fact doesn’t seem to have slowed down the career progression of our own Sir Rod. He’s still heading this and that for various governments, in the ear of our government leaders… Bring back the regal honours system I say! Sir Rod is using it to great advantage!!

  78. TB & Shane, as we know, private equity buyouts are rarely long term investments. They see intrinsic or unreleased value in a company, do a bit of slashing and burning and then on sell it.

    We may or may not think this is ethical, but directors have to consider an offer on the merits of the price offered. They don’t have to have regard to the likely restructuring that will occur following sale, and a new ownership structure.

    Well maybe they should have to consider the consequences of their actions ethically.

    This is exactly where capitalism went completely off the rails IMO.

  79. Hear, hear, Tracie!

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